We need some kitchen eating space yes but I think a banquette against the large window and a small table for 5 in that corner would be fine. That allows us to have the peninsula go up to the large window and also clears the way between the sliding door to patio and the angled doorway to hall. The ideal plan would be to remove the wall the fridge is on, put the fridge beside the large window, which makes room for a large island with bench seating backing onto an open centre hallway. But rerouting the cold air returns to the second floor will be difficult. They would need to go to the other side of the house and the basement is finished. Budget isn’t a constraint within reason/sanity. DR is the room beside the sliding patio door. I’m investigating but think most likely the wall stays so am trying to optimize with that in mind.

That's a MAJOR structural expense to be taking down those walls. The spans are huge. Unless you want a 200K expense. The house would have to be really and truly worth it for dcades of you living there. Either live with the layout as is, or move to the bigger house that you want.

I'm working on a design for a space about the same size as yours but mine is a galley so is narrower but longer constrained by a door where your range is. I also have a door to the outside where your door is. I too have a house without much storage so understand your design to maximize your storage in the kitchen. I am looking forward to the additional >useful< storage provided by drawers rather than cabinets with shelves. I'm going to do a banquette for my b'fast nook and specifically design it to provide additional storage of items I actually need to store rather than designing w/o an eye to my personal needs. Depending on what is on the other side of the wall where the fridge and pantry are you might want to consider an opening in that wall to create more sight line depth. I'm putting an opening in the comparable wall in my kitchen and will then have a sightline to the the family room and it's windows. I'm sacrificing a set of upper cabinets and a microwave that would be the exhaust hood but given how much more >useful< storage I will have with 100% drawers rather for base cabinets and better designed top cabinets I come out way ahead on storage even with the sacrifice. Having that sight line is going to fundamentally change the space and it will not seem nearly as small. Seconding the comment that MDF is >not< inferior to solid wood for cabinet boxes--the inferiority is a myth. Many high end cabinets are made of MDF because MDF is dimensionally stable year round whereas solid wood isn't. Ikea Sektion cabinets with aftermarket fronts--there are many companies that make them--is a viable option. Good luck!

@lharpie the layout I more or less am starting with is what I posted. But in the first version I was planning to remove an existing closet, and swap the position of the oven and fridge. In the below I'd keep the closet and maybe turn it into a pantry. This revised version is pretty much exactly what I'm starting with, but with less cabinets. Not sure where I'd even move the sink if I did. In the mini island would be the microwave and rollout trash. Would remove the 2 stools on the sides when not in use to make more space in the aisles.