what is the flooring going to be? with this wallpaper, I hope you're doing a gold or rose gold finish on the hardware/faucet and lighting. So, you can paper the upper half and do a wainscot below. use white or a dark blue this color and other items in this room would be the perfect match w/that paper with doing the top half and lower paint, you'd be shooting for this type of look I would do an actual wainscot and not just a chair rail. that paper deserves it. or the white or just do one entire wall

I’m loving Abnormal Anonymous’ whimsical wallpaper designs. https://www.abnormalsanonymous.com/products/mr-blow - they’re known for this cheeky blowfish for example. Also, Joss & Main has sophisticated options such as thisCandice Olson design: https://www.jossandmain.com/wall-decor-mirrors/pdp/candice-olson-breathless-pavilion-33-l-x-205-w-wallpaper-roll-whw4811.html?piid=28907799&utm_source=pinterest&utm_medium=social

https://www.amazon.com/Kromapolis-Privacy-Covering-Decorative-Non-Adhesive/dp/B0925VZ6HZ/ref=sr_1_2_sspa?crid=2L43LZTD5PFY4&keywords=decorative+window+film&qid=1661028543&sprefix=Decorative+Window+Film%2Caps%2C174&sr=8-2-spons&psc=1&spLa=ZW5jcnlwdGVkUXVhbGlmaWVyPUExV0pTSUJYT01INURVJmVuY3J5cHRlZElkPUEwNTc0MjY2MzFLQjYwWDJWQUoyNyZlbmNyeXB0ZWRBZElkPUEwNjg2Njk4MlJYUVFCVVJBRVdFJndpZGdldE5hbWU9c3BfYXRmJmFjdGlvbj1jbGlja1JlZGlyZWN0JmRvTm90TG9nQ2xpY2s9dHJ1ZQ== Take a look at this window film. Would look great on your window. Its easy to put it on too. There are other types and some even have a light coloring in them, so when the light hits, would be like stained glass. You may even find a color for the walls from the window film.

Cosmetic updates to an existing powder room do not require you to bring it up to modern code. Ignore all that and make it pretty. Will you use a marble chair rail to separate the wall finishes? Painted rail? The little things are the hard ones. I like Jan's vanity. It's pretty much what you need. It'll look better with chrome than the faucet it is pictured with. I happen to love the old "builder gizmo, sunk into the wall" TP holders in a small bathroom. They can save valuable inches. If you can afford the space, something modern would be appropriate.