I am forgetting to add that there will be a finished edge panel attached to the side of the upper (lower too, but that won't impact anything because of counter overhang) so there will be a bit less wall on the upper between cabinet and casing, but still some.

I too would go to end of upper/lower and let the countertop run proud. Very common, and IMO the correct treatment.

Go to the end of the upper as the others have suggested. I hate the look of when tile runs past the upper cabinet.

You know, normally I would agree to not going past the upper, but in your case, I think it would look okay. You have the door frame as an ending point.

By just going to the upper, you have a very thin strip of wall which will be painted whatever color the wall will be. This I think will look odd, unless the paint you are planning matches your cabinets, which I don't think will be the case.

We had a similar issue. My two cabinets flanking the window frame left 1/2 an inch on either side. The painter at first painted the strip Powell Buff but I had him repaint it to the same Dove White as the cabinets.

I would go all the way to the door. It would look weird to me to have a very small strip of wall that is not tiled between the backsplash & the door. It would make a cleaner finish to me.

Go all the way to the door. Remember every time you have a line or color change, that is where the eye goes. Do you really want eyes going to that thin strip of wall?

So here are some better pictures. I don't think it makes sense to tile over the door, because the piece next to the uppers is so slim that you can't really carry the tile up there. Also I am not tiling over the sink window for similar reasons- the window casing runs right along the uppers on either side so to put tile above would be kind of random.

I am still torn on what to do. The end panels are in. I have some pencil edge tiles and some glazed edge tiles. I'm not sure how I should end things. I am planning to do an oceany blue-green color still to be decided on the walls.

This might be a crazy idea but I think the answer is to remove the molding on the left side of the door and replace it with identical molding that is just a tad wider. Wide enough to fill in that gap. I doubt anybody would even notice that the moldings on each side of the doors are different widths and it would resolve this issue while giving you a clean bleed of your tile into the molding.

No,don't tile over the door! Just tile to the door frame, so you don't have a tiny strip of wall between the counter and the cabinet.

Funky, I don't think that would work. The molding is already right next to the counter. You would have to somehow tuck it behind the counter. If she just tiles straight across to the frame, it will be fine.

Not changing the molding- there is only 1/8" of space between counter and molding. Wouldn't make any difference. The uppers have more space but it's still a bit less than an inch.

I'd end the tile where the upper cabinets end – you've already got a little strip of paint between cabinets and door which looks fine. I think it would look funny to have the tile extend out past the cabinets, breaking up that strip.

As Matt says, you already have a strip of painted drywall between both the upper and lowers and the casing. Continue that strip by ending the backsplash in line with the cabinets.

Think of your counter top overhang as a window stool horn that extends past the casing and apron...

I would, and did, continue the backsplash to the door casing, but only part of the backsplash: