tibbrix- Thanks for that link. Your picture of the dark chocolate bathroom with the white wainscoting is what I had for a mental image. My wainscoting would work well at about 54" to work with the various elements, or lower, around 46". The room is so small that I can experiment without a tremendous expenditure of time or money. I want to do the crown in there first so I can see if I like the look of my home-brewed crown. For me, some kind of wainscoting is a given, and again, I can work out the details before moving on to the much larger LR. I can start with white wainscoting and crown, dark walls, and a white ceiling. From there, I can try the dark color on the ceiling as well to see if we like it better. It doesn't take long to paint/re-paint a 28 square foot ceiling!

You're correct that this is a challenging design. Here are some possible solutions. You seem open to replacing your furniture, so that is my first thought: --Replace both sofas with comfortable armchairs with tallish backs that can be floated in the middle of the room around a coffee table. This will greatly add flow around the room so that you're not blocking all the inconvenient doorways. Note how a dramatic light pendant centers the seating. With the height you have, a beautiful pendant would have an incredible effect in both lighting the room and bringing down the scale to a more comfortable height. You have warm, wood floors in a beautiful color. Have a wooden bookcase in the same finish built to the left of your fireplace that can accommodate your TV. Have it built to the height of your mantel. Alternatively, get a very wide console, not too deep, for the TV. The one you have is too small and doesn't link in any way to the finishes in the room. Get an oversized large square or round rug for the room in a pattern that picks up the warmth of your wood finishes and echoes whatever upholstery you eventually choose for your seating. All art work should be hung at eye level regardless of how high your ceilings are. That means the center of each piece should be around 57" from the floor to the center of the art. Pair your daughter's paintings side by side at eye level. Lower the art work over the mantel so it's about 6" from the mantel so they connect. If you love that piece, or your daughter's art, then choose your future furniture palette--upholstery, pillows, etc. from the art. (This chair is the same silvery blue as in your painting. The legs are in similar wood finish as your wood floors and trim. Four similar ones--or these--around a round coffee table would look wonderful and really function well in the room.

Your wood mantle is far too small for the size of that wall. If I were in your shoes (and I have been), I recommend you consider having a much larger surround built.

Draperies that start at the tall ceiling and go down to the floor would look beautiful, add interest, warmth, and life to the room. But they cost a lot. I will link a thread with a lot of pics and suggestions. https://www.houzz.com/discussions/5796508/window-treatments-for-2-story-great-room-windows