"I want to update the tiles with tile decals. " In front of a fireplace? Looks like you use this fireplace, and you expect decals to last exactly how long?

Your new floors look nice! What's is your budget for the fireplace? Before you get your floors redone, I would definitely decide what to do about the red hearth tiles so you won't have to later yank the tiles out of your new floor. A low budget update would be to beef up the mantle and the trim and paint it to match the existing trim in the room.

To my eye the fireplace does not have attractive proportions. The hearth is too wide and and overly deep for its height, the wood box is too small, the ceiling trim too bulky, mantle too large and too high. And the doorway looks squashed in beside it. No amount of whitewashing or painting is is going to change any of that. The good news is that it looks like the stone isn't boulders stacked up like some of the photos people have posted above. I think it's rock veneer, flat pieces of rock stuck to a cement/wire mesh base. If it's veneer, you should be able to see that from the side. Can you stand by the round mirror and take a picture for us? Veneer can be removed relatively easily by someone with experience and the right tools. Then you can have the room you want. You can shorten the hearth and put the TV to the left of the fireplace which would look much better than above it. Now is the time to do it, when you're re-doing the floor. If not, be sure to keep a box of the flooring for later if you want to remove or shorten the hearth and need to fill in the floor. My house also had an overpowering stone fireplace and the best thing we ever did was replace it with a normally-proportioned fireplace surround. IMO these large stone fireplace walls look great in big chalet-style homes with high ceilings, and are out of place in regular homes.

Since it appears that the original fireplace is a woodburner with gas logs installed, you need to keep a non-combustible hearth extension, You can cover up all of the exposed sheet metal on the fireplace, which will give you more of a low-slung, linear look like you show in your "after paint" photo, but anything that covers the face of the fireplace must be non-combustible. If that 's drywall I see on there, it needs to come off. Unless you have a specific purpose for shelves on that wall, get rid of them in your design. Let form follow function. The size, height and arrangement should be connected strongly to your purpose. Stone always looks better al the way up to the ceiling. I would only go somewhat wider than the fireplace to create a strong focal point. Unless you have a mid-centruy modern aesthetic you're working with, placing stone on the whole wall will make the texture less special, Since your fireplace is already raised off of the floor, I recommend against placing the TV over it, not because of the height of the TV, but because it will be an awkward fit. Come up with a side-by-side arrangement you both can live with.