Oh that's so funny, we have the exact same floorplan. I was not open to putting the TV on the wall opposite the windows b/c then you'd have to put a couch in front of the windows and face away from the backyard, plus block the view. Definitely not putting a TV in front of the windows so that only leaves the fireplace wall. And the built-ins were already there and they take up every single inch of that wall -- no drywall at all. Our windows go all along the family room wall and then all along two of the three walls on the breakfast nook bump out (the third wall has a door to the pantry) and then it's all connected and open to the kitchen. With the way our built-ins are set up, there wouldn't be enough room for the tv on either side regardless. I like the room in the above link that has the TV in built-ins to the side of the fireplace and doors are covering it so you don't have to have it in view all the time. Another thought is raising the hearth of the fireplace. What gets me is the staggered look of the tv next to the fireplace, but not at the same level. Wouldn't want the TV super low so raising the fireplace would allow them to be more even. I don't know...just a thought. Overall, I'm ok with our TV being over the fireplace. If I were designing it, I would probably have done it differently. The mantle is higher than standard so our TV is higher too. I'd make the mantle lower if I could have. Then the TV could be a little lower as well.

I would get rid of the whole lower mantel (one mantel is enough there) and the side 'walls' around the tv, and build in an upholstered seat almost like a deep window seat or daybed, with bookshelves that face inward to the seating bench at one end and bookshelves or closed storage below the seat. A little pull-out shelf table that slides into the bookshelf when not in use, for holding a cup of coffee or a glass of wine. A wall hung lamp by the bookshelf end, or lights built into the ceiling of the nook. A few plump throw pillows and bolster pillows on either end. It would be extra seating, but also a wonderfully cozy nook for some quiet, private reading or daydreaming. Having more fabric and softness in that space would be a nice balance to the harder lines of the tall windows and the mirror, too.

the number one thing, move that sofa out of the doorway. pull the rug and sofa floating in the room. center the rug and put the front legs of the sofa on it. the chair looks like it was part of a sectional? is that true, if so I would take it out and bring in the chair you have in the dining area and that love seat. put the love seat to the window side and the chair to the other side angles. you have a great touch of blue in the island, bring that into the other room in touches, patterned curtains, pillows, and in art work. splash it around and let it be the first bit of color it will lead you into others.

@saratogaswizzlestick - Thanks for your ideas! How would the latch and panel open? (Would it swing outward like a cabinet door or something else?) I'm having trouble visualizing what you mean. :) P.S. For reference for everyone viewing this thread, the carved tv area currently has a rolling double "doors" that can be pulled together to shut or pulled apart to retract into the space.