I also thought of using the wall that Karen used, but it throws the room off quite a bit. The fireplace wall is still the worst place for the TV, due to glare, not to mention aesthetics. Perhaps you could move the dining table into the kitchen (replacing the kitchen table), and then put the TV in the dining room. I personally do not like eating in the kitchen, but there is a dining table of sorts already there, and if the TV is more important than dining, the the dining room could be sacrificed. I also agree that the room is beautiful as it is and think that the TV should be placed somewhere outside this room, which is why I suggested the dining room. Another alternative, since you are remodeling, would be to close off the fireplace opening so that it is merely a stone wall, and then it would not seem like the fireplace has to be a focal point. You would have to be able to find matching stones, however. If you want to keep the fireplace, it pretty much needs to be the focal point of the room.

I see this languishing way down on the Design Dilemma queue. That's not good. There is something so wonderful about the light spaciousness of that room that I'd suggest you go for a very light grey -- I think cool will work better with the blue-green range of colours you are thinking of. White trim. I was thinking it might be best to decide on the fireplace when your furniture is in and the walls are painted, but I suspect carrying the wall cover over it will work best, because it really is a rather imposing chunk, isn't it? Not sure about the aqua ceiling .... I'd like to hear others' opinions about that.

@Patricia, here are some realtor photos from the rest of the house (previous owner's furniture, not mine) In this one, you can also see the stairway paint color (could I simply extend that one into the living room?)

I would also remove the small bookcase on the wall and put a colorful large vertical piece of art that you love on that wall. if there is room, possibly add an accent chair in that corner with the floor lamp. the lamp needs a companion in that corner and possibly a chair, again if there is room