You absolutely don't want grout there for a reason - when the plane shifts and expands, as it will, grout would crack open. That's why you use a colored silicon caulk that matches your grout (all grout companies make it). Don't use grout and cover it with caulk as this defeats the purpose and you'll just have a caulk-coated crack. Hang the bottom row of tile the same distance above the counter as your grout joints, and that joint will just look like another grout line: I'd agree re. the quarter-round trim - I'd fear wood would get wet too often in that area, discolor and ultimately rot away, or else hide wipedown crud underneath it as it loosens over time. :-/

I think butcherblock would look nice on the counters. A white backsplash might be too much white. You might consider a pastel-colored tile in one of the soft blues or greens from the rest of the house. (This may mean you need to change wall color to go with the tile, are you OK with that?) Have you considered updating the knobs on the cabinets?

@Beth H. - thank you for your comments. I don't think we want to have dark counter tops. The kitchen is open to our family room. The minimal wall space in the kitchen will be painted a light blue color, as will the walls in the family room. We were thinking about: a) white cabinets and island b) the Calacatta gold marble 3" x 6" tiles for the back splash c) light(ish) counter tops on the perimeter and island (perhaps with some grey coming through d) medium brown hardwood floors We thought about using walnut for the island surface, but decided against it due to maintenance issues. If we didn't want to have dark counter tops, are there any other options? Thanks!

I LOVE your counters - I considered a Blue Australe which seems similar to laboradite, but it was almost twice the price, at the time, of what I ended up choosing, Volga Blue. (very hard capturing either of these stones in a picture, isn't it) So I understand your challenge, I spent a long time puzzled over a backsplash for my counters. I went with the Seneca Tile company's Blue Lagoon from the Studio line. My counter reads black and hints of silver at first glance, the blue inclusions are subtle until you are trying to look for them, so it doesn't read too busy in real life. In the same line, they have a gorgeous variegated green called Waterlily, it might work in your kitchen Seneca waterlily- here's some more inspiration, some of these blue/ green mixes that may work- from http://senecatiles.com/senecablends-gallery/nggallery/page/1 Here's a work in progress shot of our Blue Lagoon backsplash going up- I have no regrets going bold and colorful, I feel happy every time I look at it