Here's another pic of the wall end... the rounded corners make it hard to paint a different color with out an odd paint line, so molding would help divide the wall color

Whether to do a passthrough, half-wall, or full wall all depends on how you want the two rooms to feel and function (both separately and together). So, I cannot tell you what will work best. However, my brother recently renovated his kitchen (nearly finished) and changed a full wall to a half wall between his kitchen and dining room. He tends towards more informal gatherings and he wanted to help the small closed-off kitchen feel larger and more open to the house. He does not like upper cabinets and with the remodel was able to acquire additional lower cabinets to make up for the lost storage. He has no stools on the dining room side of the half wall, though the granite does cover the top of the half wall. (In fact, the dining room is simply too narrow to accommodate a table and chairs and counter seating.) His new kitchen feels very open and light (the dining room is on a corner and light floods in from two large windows) and he is extremely happy with the result. Your inspiration picture is very lovely. The detailing on the window is beautiful and could probably be duplicated through wood trim on a pass-through if you would be interested.

Thanks everyone! I think I'm going to pass for now; if the chairs are still around on CL in a few days, maybe I'll see if I can look (and measure) in person. My hunch is that they are not properly sized for dining chairs. And I'm also wondering whether I should be looking for something different entirely. The colors in my photo are off - the walls are not nearly that bright - but it suddenly seems like an awful lot of red. Back to the drawing board...

If you use round end tables, use a rectangular or square coffee table. Printed drapes in the dining room are fine with solid drapes in the living area. For your chairs, I would stick to green/camel OR red/camel. You can keep your sofa as the one red item in the room and just use touches of red in art or accessories. Or get a cream or green slipcover for the sofa and just work with the green and camel colors.