If you decide on a woven wood, to determine the height to mount it you should first find out what the drop is or how much gather it has when drawn up. You'll want to mount it high enough so that the material doesn't cover up too much of your window when drawn up. I have some pics on my blog with links to many more pics. Look for the article about draperies. Here is a link that might be useful: bobtheblindguy

I think I understand the problem. You want to protect the carpet from sparks of burning wood that may fly out when you're putting wood on the fire, correct? This is sort of part and parcel when you have a wood fire, it pops out sometimes! I used to have wood heat for years when I was single--and LOVED it! Short of adding more concrete pads or tile... This is what I did. The easiest and most inexpensive way that you could deal with the issue is to simply have your carpet installed (maybe in a colorway that won't show soil) and use a throw rug in front of the stove that is large enough to catch the sparks. What about a remnant from your new carpet? That would blend in. A throw rug in the same color family as your carpet would be good, too. When they get burns on them, you replace them. Just an idea. If I'm completely off base, sorry! LOL

Looks amazing!

NO new subfloor. You have 87" ceilings = 7' 1/4" ceiling height. That is quite low. If you add in a subfloor you will probably reduce the ceiling by 1/2" or so....making it less than 7' I would look at floating a floor over top the old tile or laying carpet. Either way you should be fine without adding subfloor and loosing ceiling height. What is your plan for flooring?