As long as you are sure you will have the quality of lighting that is right for your purposes, do what you like the looks of and don't worry about what others think. Having enough light for your needs is all that counts. In my L shaped kitchen, I formerly had only two ceiling fixtures and although I "thought" it was reasonable lighting, my kitchen designer encouraged me to consider the recessed ceiling pots. We now have 8 recessed pots to replace those two previous fixtures in our not yet complete renovation. I am thrilled to pieces that I listened to my KD. The quality of light I have now is sooo much better. Previously, when I stood in front of the counter there was obvious shadowing falling on the counter in front of me, now if I stand in front of the counter, there is an even light and if I really look for it I can still see a faint shadowing but basically the counter is shadow free. We have Ice Par halogen bulbs in them to give a diffuse even light. I didn't realize before that my lighting was substandard since it was all I'd had for 27 years. I will also be getting under cab lighting to brighten the space under the cabinets and one pendant to go over our little eating/workspace peninsula beside the stove. The pendant is not to use with the other lights but to use instead for someone having a late night snack or such. I have a family member who did a kitchen reno and replaced her original fixtures with improved ones rather than going with recessed pots and she is satisfied with what she has. I probably would have been satisfied if I had done the same but I am happy that I took the chance on the change since I can see that it has made an improvement for me and I haven't even got to the point of moving in to my new space yet! I can't see that simply replacing my orginal fixtures would have chased away the shadows the way that this lighting arrangement has.

If you remove the wall entirely, you will have about a 4-1/2" wide space where the removed wall butted into the back wall. You could possibly put it there. How complicated the wiring redo will be depends on what you find with the stud construction and how the wires run once you open the wall. Keep in mind that you will likely find a 2X4 right at the intersection of the two walls and this could make things a little challenging because it won't be flush with the back wall. One other option is to remove the top part of the wall that extends above the vanity surface and keep the bottom part as an end wall for the vanity. You might then be able to mount the switch/receptacle lower on the wall (although I suspect this would involve re-wiring because the cable will probably be too short).

painting the outlet isn't going to make decorating around it any easier. you still can't hang anything near it. your electrician can lower that outlet without too much trouble. (just cuts a hole further down, moves it down (hopefully there is enough play in the wires) and patching and painting the drywall above. Moving it off to the right side requires him fishing the wire through all of the adjoining studs in the wall (a PIA), or completely rewiring it and putting it elsewhere. Just so you can hang something, I'd have him move it down and off to the left if possible. personally I'd love to see a fabulous piece of art there. those hangings are nice, but not right there. you need something more because of the extreme height. and, you already have wiring for a sconce. get a nice one to put atop any of these.

Your first photo shows an outlet, not a switch. If it can't be moved to the left, leave it where it is and hold the backsplash back a couple inches from the cover plate. The fact that the backsplash doesn't go all the way to the end of the counter won't matter.