I'd probably go with the smaller version. As you said, your room isn't that big and your ceiling is about normal height. I'm thinking the larger version would feel to heavy in the room- especially since it has multiple pieces of glass. One foot to each side of the fixture isn't that much at all.

how fun to be doing a refresh of your room. I am not a professional so I dont know the regulations and code for fireplaces, so i cant answer those types of questions. I do think though that I would keep your fireplace surround very simple. I say that because you also have to work with the 3 windows on the right and right now the fireplace seems to not quite work with those windows. I think part of it is the color, i would keep the wall color consistent with the rest of the room. the other idea is to just tile that corner and feasibly not have a mantel or hearth, just keep it simple. heres a few ideas. I will also say the way you approach the fireplace depends on the feel you want for the room in total. heres the concepts I was trying to explain

Well, let's see. Its dark with a busy stone face in a room with light paint color and trim. Its outlined in black when the windows are white. Its rectangular when you have very distinct curving visual elements all around it. Replace the facing stone with something smooth and white, paint the trim, replace the inset with a cool-toned metal and you will be good to go. I would also probably "float" it so it doesn't touch the floor (if possible) and continue the baseboard under it.

I would not do the steel over the fireplace. It cuts the room in half. Right now the room is long and that makes it feel narrow. I would make the fireplace a few inches taller and stucco the area you were going to do in steel. You could also do a judges panel treatment on that part or on the end wall. Another option is Italian or limestone plaster on the area above the stone.