IMO, go direct vent. The top vent (regular chimney) is just that, a regular chimney pipe - a single pipe carrying combustion products out of the home. When using a regular chimney, the combustion air comes from somewhere else, usually leaky windows, doors, bathroom fans etc. To me that means you lose comfort (it's drafty) in those areas where you're pulling combustion air into the home. And the pipe gets hot so you have to respect the proper firecode installation rules. On the other hand, direct vent chimneys are double-wall pipe. The center pipe carries the hot combustion products out of the home and the surrounding outer pipe brings in the outside air. That cuts down on the drafts at doors and windows, plus the outside of the vent pipe runs cooler, so it should be safer from a fire standpoint (you still install it per the firecode). The safety of direct vent IMO would be higher. I don't think there would be any major difference between installation, cost, appearance of the fireplace, or flexibility between the two options.

I would think twice about putting a TV above the fireplace because that is not the ideal position for comfortable viewing; you have to look up at it. The screen should ideally be at eye level. But if that's your preference and you're confident it works well for you, go for it. We just had a direct vent insert installed in our prefab fireplace, and our price is similar to yours. I cannot comment on your estimate for the mantle because we didn't replace ours. I think they come in every style and price, and your estimate of $1000 seems certainly a generous allowance. One word of caution: the clearance of the mantle should conform to the insert's specifications, or else it will get too hot, which is a hazard. Check the insert's installation manual. A really good LCD TV (say, the top-of-the-line Sharp or Sony) might cost more than $2000, depending on screen size. We bought ours at Crutchfield.com. Their prices are not the cheapest, but competitive, and their customer service is first class. Happy snuggling near the fire with a good tv show.

"...the Northern region...." and "..cold winters...." are not very specific. To people in Florida, Virginia has cold winters. Additional information about climate and your gas and electric rates would be useful in advising you.

Is there such a thing as a down-draft direct vent natural gas fireplace? We want to put a gas unit on an interior wall and while we know a vent-free unit is an option, someone just mentioned to us the possibility of a down-draft unit since we have a huge crawl space under the house. I know there's such a thing for a oven/range but not sure if such an animal exists for a gas fireplace. Anyone know?