We have plantation shutters on our windows, and I simply love them. I have not heard the term cottage shutters. We have exterior shutters as well, I never thought about them not going together. Most people I know who have plantation shutters also have exterior shutters.

Yes, Penney's installed them and it's included in the price. There was only a choice of real wood or composite. Then you could pick your color (they had many colors including stained) You also pick your louver size. They are made my Norman Shutters. Scroll through their website and there are some beautiful pictures. I wonder if different Penney's use different brands???? I only did the front of my house but that included french doors and that sometimes raises the price a bit. So with my 40% off sale, my total for 14 windows and 2 french doors was $6100 and then I got another 10% off for doing the whole house with them. (wood blinds on the back) So that brought it down to $5490 The French doors have a cutout for the lever that I think looks pretty cool. Here is a link that might be useful: Norman Shutters

I'm comparing apples to oranges here - having had lined draperies in our previous 75 year old (minimally insulated) home to the 4" wood plantation shutters that we have in our new energy efficient home. But I will say that I love the shutters so much more than the drapes! We had them installed on every window in the house (except for two glass block windows) and while it was a significant investment for us, I figure we will never again have to buy window treatments. The light control they provide is excellent, and I don't find that they decrease visibility. I also don't know anything about insulation properties of wood vs. poly, but I do know that your windows will look very crisp and fresh with shutters. That's the direction I'd go, simply because I prefer the look. Our wood shutters do an excellent job of helping to insulate and soundproof the windows. It's been in the 30s for a low here, and I can stand right next to a window and not feel cold when the shutters are completely closed. Looks like you've got a very pretty space to work with!

If you need to be able to cover and uncover the upper level windows during the day, you may need a motorized shade option, or a long pole to keep handy to reach up and open/close plantations shutters. Here are several images of plantation shutters on two story windows. Also a 2014 Topix discussion of plantations shutters on 2 story windows - HERE.