Can’t help you with your dilemma, but I would like to say a nay for a niche. Yucky to clean. If you have this possibility, use a shelf instead.

I like the idea of using an old fashion deep bathtub in there. It would give the bathroom an artistic touch and become a 'must see' room for your home. Update the sink and toilet making everything white then add black accessories if you still like the black and white look. Rebuilding that tub wall will increase the total price of the renovation but I think you will be happy you did this years from now. Get a few estimates on the wall, it may not be as expensive as you think. Another option is to spread out the renovation into two phases.

Hey there, thanks for the feedback! Yes that was my concern, I didn’t want it to look busy with all of the tile work. I hear ya, but it’s also the guest bathroom (though guests have been few and far between the last 2 years!). But I’m of the mindset I want to make something as beautiful as possible, even for my little guy 😀. Right now the bathroom is straight out of the 80s. Lol. But thank you!

First I sure hope you are not installing the tile this size tile requires a really experienced tile setter and IMO a 12 x24 tile in this space would be a better choice I like 12 x24 porcelain tile the same for both bathroom floors and shower walls and a stacked pattern for both allows for any decrepencies in wall height ar wonky walls . I hate niches and for sure when using those huge tiles What has been done for waterproofing ? That is the first thing to address and please show us the space.