I vote for hardwood or engineered wood through the whole space, including the kitchen. Opening the wall would be nice, but I suspect your appliances are arrayed along that wall? I'd paint the wall the same pale color as the living space, and hang a really big mirror on the wall if you can't open it. Then you open the wall visually, and reflect the light from the sliders back into the space. (I know...me and mirrors. They are great manipulators of space, particularly when you commit to making them big!)

Can you post a rough sketch (straight lines are not required!) of this floor of your home so we can see how they relate to each other? If you can note each rooms wall lengths and door and window locations, I'm betting there's a good solution out there that we just haven't come up with yet because we still don't have a very good feel for the existing layout. It's really too hard to get a complete idea with just photos. It would also help If you let us know your budget. That will help us know if we can dream big, or we need to keep to modest changes. One of the first thoughts I have, even without seeing your floorpan, is maybe you could split up the room next to the in-law suite (your current dining room I think?) so that part of it combines with the in-law suite to make that a little bigger, and part of it combines with that little extra room that's really just a hallway and plant area now, so that it makes the dining room bigger. (Again this is all based on whether or not I'm understanding which room is which, but I hope you are understanding my idea.) Now, it would be more expensive than just tearing down one wall, because you would be tearing down two walls and building a third, but maybe that would make the perfect size dining space, and you'd have a little bit bigger in-law suite as well. That could be a win-win. And now, you or others can say that can't possibly work because of this or that, (or maybe it does) and someone else has an idea, and so on. So please give us a rough sketch. That could be just the thing for someone to come up with a brilliant idea.

Please stick to your original thread or you'll lose your audience.

Just a few personal opinions: Many New England homes have 8' ceilings; the 1905 I grew up in had 8 1/2. Pot lights at that height are visually jarring to me and compromise the serenity of an expanse of ceiling. Also, people tend to put in too many because once they decide on that option, more is not excessively costly. The result is a runway look. For an early 1900's home you're dealing with plaster and lath unless someone already tore it out. Once you make holes in that, you can lose the plaster - especially on a ceiling it can pull away from the lath. Then, dusty reno mess and call the sheet rockers.