You should follow manufacturer's instructions and also follow your fire codes. I understand what you are saying about the visual space problem you'd encounter with a mantle two feet above the fire box. I believe there is a formula that you can use to determine according to fire codes how far away your mantle should be from the firebox it's based on projection of the mantle from the wall. For example, a mantle that projects 12" from the wall needs to be further from the firebox, probably 2 feet. A mantle with a projection of only 6" can be closer to the firebox. At one time I found this formula and determined that our 8" deep mantle could be 1' from the firebox and we were able to have more space above the mantle. Look up your local firecodes and see if you can find a similar formula for your area.

Before you buy the 60" TV, check to see how close it can be to the firebox. Looks like you have a gas fireplace which can really pump out the heat, if it's like mine. Is the cabinet to the left built-in, or free-standing? How wide is the frame above the mantel now, from end to end outside measurement? Is it 60+ inches?

I’m interested to see the outcome. I too have a cast stone fireplace that has no mantle to set things on. I would love to add a wooden mantle but not sure where to place it, whether to paint my cast stone?

Art lovers usually start with an art work and choose paint colors and furnishings that harmonize with the art. However, you're going the other direction since you already have your furnishings. First of all, you'll be looking for a vertical piece that will cover most of the wall above the fireplace. What subjects do you think you might like? What's the palette in the room right now? (Wall and floor colors?) Landscape? Skyscape? Abstract? Realistic? Start to think about this. Look at what Beverly and Olychick posted. Notice how the art and curtains pull the eye away from the massive TV and balance out the space. I like the color block idea that Beverly chose. We haven't seen enough of the living room to make a call on this. Good luck!