It depends on what you're looking to use it for. If you want other options to best use that space here are some. If you have a low budget, these stores have good deals on storage: Five Below IKEA If you have a high budget, these are good options: The Container Store Bed Bath & Beyond

A fresh paint color on the back of the bookshelves would help a lot, especially if you don’t have much color in the room. You could also pull that paint color out and repeat it with pillows or accessories. I would also rearrange your bookshelves, and instead of having one object displayed per shelf, such a picture frame, I would incorporate plants, books, small art, etc. to make it more interesting. There are tons of examples of bookshelf styling on Pinterest if you’d like to make your bookshelves look more stylish.

The chair rail, the paneling and the baseboard all act as one unified piece. If you paint one out, you have to paint the rest out. But then, you have to paint the crown and the door trim or it will look very bad. In theory you could leave the built-in as is because it's sort of a stand-alone piece, but again, I think it would just look old and bad. This is not pretty or quality millwork that is worth saving. Leave the beams. My guess is when you have done all that, you will realize how lovely it all looks and will want to paint it all all everywhere in the house! The trim is all very narrow. Personally, I would paint the trim, crown, panelling, walls, and built-in the same color, possibly bumping the sheen on everything but the walls above the chair-rail.

An alcove would be cheaper than new built-ins. You could just mount the TV on top of what you currently have and try painting your built-ins, but ripping them out would allow you to mount the TV lower which is better ergonomically (TV's should be eye-level to sitting). The little column details and trim bits make the built-ins a little busy for me, though. I've been told that built-ins add re-sell value, but if they aren't working with how you want to use the room, they should go. I think the alcove/benches in your inspiration photo add value becuase they give the room space to breath, but people seem to need a lot of storage these days. You could float some shelves high up in the alcove, but those can be expensive too. Here are a few inspirations: