IMO, you must remove all of the existing shrubbery and replace it with things more promising. The existing shrubbery is wounded, downtrodden and has little chance of recovering. Plus, it was not chosen for low maintenance or excitement. Just start over. You stand a much better chance of making something good out of new plants ... planted a little farther from the wall so they have room to grow. A retaining wall is only necessary if you need to fix the grade for functional purposes, which doesn't seem to be the case. Instead, compensate for the falling grade by using a larger shrub at the low end and lesser height shrubs as the grade rises. In the area around the porch and farther left, you could get away with a single type of plant. (Any hedge that is part of a foundation planting should be trimmed level, not parallel to the grade ... so as to make the house appear stable.) Some color are around the entrance could help cheer up the overall scene. You really need to learn the proper way to trim shrubs as it will make an astounding difference. In order to keep the lower foliage, shrubs must be trimmed wider at the bottom then they are at the top. Of course, select varieties that can stand the existing light conditions as well.

The first question..."has the tree outlived its usefulness?" begs another, HOW is the tree useful? Like a giant parasol, it provides protection from strong summer sun. It even provides a little protection from beginning rains. Visually, it adds interest as a sculptural object. And it frames and enhances (or obliterates depending on how it's controlled) the view of the house/property. I cannot see that it has outlived these functions. But I can see that it could be controlled a little differently so it does a better job of framing the view. Here's a little sketch that illustrates my point. I offer it not to convince you, but in order to let you know what to look for as you observe trees in others' front yards. As you travel about during the day, notice the difference in effect between trees that have been limbed up and those with low-hanging limbs. In general, large older trees that are limbed up present a cleaner, more stately appearance. If they have been limbed up properly (with balance and without protruding stubs) the character of the trunk may be much more impressive than one which has the competition of low limbs and foliage. The tree on the left competes and obstructs; the one on the right frames and shelters. Take this suggestion with a grain of salt as it's based solely on the view shown in the next photo. I've marked red Xs to show which limbs I'd probably remove, but this is something that would really depend on what the tree looks like from all angles of view. The goal would be to have the tree be balanced from all views and get the limbs high enough to visually clear the house. Remember that limbs left on the tree will get LOWER in the future as they grow longer and heavier. (It is hardly ideal to "organize" the branching structure of a tree after trees have grown for many years without guidance. It's far preferable to prune frequently along the way. But we're working with what we have.) Keep in mind that limbing up the tree also has the benefit of allowing more light to enter below while still retaining the tree's ability to shade from the high sun. This means that one's ability to grow other landscape plants below it is improved. "Is the tree too big for the house?" Imagine a little log cabin at the base of giant redwoods. Could there not be a more charming picture? In my view there's no problem whatsoever with a tree towering over a house. But they need to work together, not be in competition. The tree should shelter the house, not obliterate it visually. The tree roots should not interfere with the house foundation. One must desire the shade. When those requirements are met, a tree can be welcome. Though big old trees sometimes do fall over in severe storms, the likelihood of this happening is small enough that one can find thousands of danger-causing conditions that can be worried about before it. I just measured the trunk diameter of an oak tree that stands 14' from my house. It's 62". But before I would cut it down (It's benefits to me are tremendous even though it can also be a PITA,) I'd quit driving or riding with others as that's far more dangerous and likely to cause me injury. Keep the new walkway WELL clear of the tree trunk. I think you must pay much more attention to the geometry (shape and layout) of the new path than what is shown in either of the proposed schemes. It is a built object that is an extension of the architecture. It should demonstrate this. Because of the tree, it would almost certainly have a curving component to it. You might need professional assistance here to come up with the right scheme. (Though it MIGHT work out that way, in my mind, it is not a "given" that best location for the porch steps is at the center of the porch. Design is often a balancing act and you'd be considering more than just the porch and the steps.) Regarding "what to plant in front of the house"...the first thing to do here is work out the shape & form of the plant masses before thinking about the species of anything. You have to do this before you can figure out what plants are capable of making these forms. Consider that a very attractive custom built section of decorative fence could be the basis of screening the AC unit. It could be an opportunity to further enhance the architecture of the house and work in unison with plants. For some brainstorming ideas, Google images for: air conditioner screen.

Be very careful with knockout roses. They are NOT low maintenance. They are the #1 shrub we remove for home owners. They will get up to 6' tall and once they are overgrown the bottom roots will look bare. Your best bet it to find an evergreen shrub you like and use it as the foundation plant that will grow to a height you are happy with. If you want roses then consider the Oso easy (3'x3' max height), Drift roses (2'x2' max height) or the home run roses (3'x3'). Can you show us a photo of the area you are wanted to landscape? Also do you know what zone you are in (what state do you live in)? What kind of sun does the area get morning/afternoon, full sun/part/shade?

You can work off the photo, but -- as always -- it needs to be converted into a PLAN first ... a plan being, more or less, a map of your yard. It allows you to place the plants in the right place. Just draw the components of the yard -- house, walk, drive, trees, lamp post, etc on a piece of graph or plain paper, measuring everything out in order to keep it in relative scale. 1"=10' is a good scale to work with. You could also use 1/8"=1' or 1/4"=1', though the latter might require a fairly large piece of paper. After you get the base information down, you can start drawing where plants would go. Do this on copies of the original or use tracing paper in order to avoid lots of erasing. One tip: don't draw individual plants unless they are standalone specimens ... like a tree or shrub that stands alone. First draw the bed, then draw the shapes that the plant collections occupy within the bed. If you have a survey, you can begin with that as the basis of the drawing as it will show the location of the major constructed elements. As I mentioned previously, you can clutter up the simple scheme I gave you as much as you like, but keep in mind that when you do, the end result will look cluttered, and require more maintenance to keep up with. The scheme I offered accomplishes your basic goals, but allows you a great deal of control of its ultimate "flavor" through the selection of plant materials. You have options for tweaking bed shape and other details, and adding some "punctuation" (those special plants that excite you and you can find a good spot for.)