We've had the TV over the fireplace in a niche for 8 years. Never been uncomfortable and no one has complained which is not unusual since every home on our street was built with a TV niche years ago. Since we have the niche we don't have the same issues w/ decorating the mantle or placement of other equipment (it is under a shelf built by DH). However, in shopping recently for a new TV we noted that it seems very common now to mount the TV to the wall using the bracket that permits movement of the TV in/out, right/left, and slightly tilted; often wires are run within the wall down to the other equipment placed in a cabinet to the side of the FP. Good luck!

Oh let me share....lol :) I love sharing something when it can benefit someone. We were lucky to be able to do our tv install as we tore out the old fireplace to put in a new one. Not everyone has this ability so one needs to get creative. We installed an HDMI cable to the tv. It is the only wire that goes to the tv. This then plugs into the receiver that all the other junk plugs into. So if you have your cabinet of junk in the room with the tv you only have to hide one wire. To hide the one cable you can do several things. Baseboards and crownmolding hide wires nicely. You would have to install a plate behind the tv which has a connector on it. The hdmi cable would go from tv to the connector on the plate. Then another cable would go behind that, up inside the wall, along the ceiling hidden by crown molding, then down the wall to another plate that sits in front of your media cabinet. The cable would run from the lower wall plate to the receiver inside. If you do not have crown molding but do have baseboards you can do the same process but you will have to be a little more creative. I actually ran my wire from the crown molding down to the floor by cutting a tiny hole in the drywall in the corner of the room. I crammed the wire in the crack and filled it with caulk. I had to do this because the wall had a window on it and the framing did not allow me to bring the wire down through the wall frame. HDMI wire can be really expensive. But there are websites that sell at tremendous savings. We got a $50 pc of cable for $6. With all the savings we took this install to another level. We ran the cable around the baseboards and into the adjoing room where we have an office. The media cabinet is in there. We used one of those radio remotes (infared or whatever you call it, it was less than $100) and now have no media in our family room. With simple programing we now hit one button to watch tv, listen to the radio or watch a movie on dvd player. The one button tells each necessary device to turn on depending on what we are doing. No need to turn on the tv, the dvd player, etc. Just click dvd on the remote and it is ready to go. Many folks put the system in a nearby closet also. This install would have cost us a lot of money if we hired out, but doing it ourselves with a little bit of research on what can be done and where to buy the stuff reasonably is what made this possible. You do not need to hire a pro every time. Another good thing to remember is that the viewing distance for tvs is really important. Too high and too close will make you miserable. Really sit in your room with the black paper on the wall before you do this.

It is a better place for the TV than the mantel. Why not have a custom piece built that fits inside the niche and then extends outside of it to hold the TV? On the back part of it you can place the gear and the TV can sit on the part that extends in front of the niche since it is a bit too narrow for the TV.

PIcture didn't post. Can you include it? Thx.