A house provides you with more than shelter, comfort, and security; it's the primary place where you interact with your family. In the past a fireplace was a warm location where the family naturally gathered and that is still true although the fireplace has become more symbolic than functional. In many homes the real gathering place for the family is in front of a large screen TV so how do you decide which element gets "pride of place" in your primary living space? Some will say put it the TV above the fireplace and others will say put it in a corner or others will say put it in another room so it doesn't distract from family interaction. The same goes for a dining space. Many will want it to be open to the living space and/or the kitchen and others will want it separate to reduce distractions and encourage family interaction. Of course, the family will interact in any case but it's a matter of whether it is casual or more structured. And then there are guests. Usually you will want to talk to them in your best space but other family members might want to watch TV in that space so you will probably need two TV spaces. I design houses for clients so I try not to have an opinion about how they want to live but I often gently guide them toward spaces where family members can interact face to face. For me that is the most important function of a house.

The reason people have their TV's so high is because fireplaces require specific clearances to combustibles. If your TV sits too close to the fireplace, it could start a fire, or at the very least: warp and ruin your expensive TV. Find another wall for your TV - they really weren't built to withstand the heat from a fireplace.

I've had my tv over my fireplace for over 5 years and absolutely love it there. Nothing like having a nice fire while binging on Netflix. For your space, I'd go with the bigger tv. There's room for it without the space looking crowded. One thing, consider installing a fireplace mantle below tv. A mantle will protect your tv from the heat of the fireplace. You don't need a deep mantle depending on the setup of your tv and wall bracket. A tv exposed to that kind of heat will not last.

I would move leather sofa in front of fireplace floated- so you could walk behind still. Move oversized chair table to where sofa was- angled toward tv. Loose the big bulky tables that aren’t needed and get one smaller side table for a small trim line lamp a standing lamp between the 2 windows possible. Get a round smaller coffee table for in front of couch. In future I would downsize big bulky chair for 2 smaller accent functional chairs you could set side by side or one on each side of fireplace facing each other.