I love the look of curtain rods that span the entire wall of windows. Looks cleaner and is more versatile.

Here's what I came up with:

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I think the drapes would look great mounted above the transoms with panels coming down between each of the windows.

Panels mounted high:

Panels mounted low:

Just from those mock ups-the highest mounted ones look the best to me.

I vote for highest mount.

Before I did the mock-ups I would have said lower mount, hands down (I like high rods, but have always thought it best to leave transom type windows out of the drapery area). But seeing them, I really like the high mount -- the lower looks really awkward to me.

Your drapery bill is going to be outrageous, but worth it. :)

I like the highest mount too. The lower mount seems to pull the eye down to the lower level.

I like the highest mount as well.

Another vote for highest - that room is gorgeous!

I don't have transoms like you but I have high windows. There is no space between the windows so I just put panels on the ends. I like the mock ups of the high panels between all the windows.

Bad pic of my family room window but its to give you an idea of the high panels.

What great virtuals! And how nice of you to do them for the OP, avesmor and kellyeng. It would certainly make my decision easy-higher mount, definitely! It makes for a really gracious room.
Dee

I like the high mounted rods - looks much more dramatic and draws the eye up to the high ceilings.

High mounted - we did this in our diningroom and it looks beautiful.

Love the high mounts!

We just did this a few weeks ago--mounted the drapes above the transoms and between the windows. We do not have a privacy issue so the drapes are for looks only. It made a great difference and really draws your eye up for a "grander" appearance. I highly suggest mounting them higher.

I love the current paint color and it's a good match for the carpet.

I too vote for the high mounts. The lower ones look awkward to me! Beautiful room!

ahhh!Gorgeous! I suggested the higher mount because I also have transoms although not as high as yours and I struggled with where to mount my window treatments. I finally went with above the transoms and have never regretted it. I've read in magazines that if you have transoms, then the drapery should always go above. Glad I did it right the first time. Above is the way to go and those virtuals show that!

Another vote for the high mounts.

High mount would look way better than low mount and also you get the railing painted in the color of the ceiling. It will look much better this way.

A voice of dissension here. How will the curtains hang for the majority of time - open or closed?
Personally, I prefer the curtains mounted high when they are open - but when they are closed, I prefer that the transoms remain exposed.
An alternative may be to have a divided privacy underpanel on an invisible track traversing the entire length of the wall between the top and bottom windows, which can then be concealed beneath the decorative tall curtains during the day.
I would also relocate those two grillwork panels. They are attractive but clutter the wall space in an otherwise clean and simple decor.