I have 2 tiered at our lake house and counter height at home. I love each of them in their respective spaces, and I think a lot depends on your layout & how you plan to use the island. Our home island seats four - not all lined up, but 2 stools on each of a short & long end. It is a single top slab -no prep sink/cooktop - and is essentially our everyday eating spot. It's open to a sunroom/seating area so I can chat with anyone sitting there without them being on top of me while I work. At the lake house the bar height helps denote the space between the kitchen & LR in the open floor plan. We entertain casually there and the higher tier works well as a place to put out appetizers and drinks while still allowing the counter height level to continue to be used for food prep. One thing to consider is whether small children will be sitting at the island regularly. Bar height stools can be hard to climb onto and rather high up for toddlers & pre schoolers. My Dad who is in his mid 80's finds my counter height seating easier to manage than bar height. Just some thoughts to consider.

We have a U-shaped kitchen, open to the dining room, with the sink at the end. Anything on the counters near the sink is visible from the dining room. The only time things tend to get piled up near the sink is if we can't put dirty dishes in the DW, because it's full of clean dishes. That situation never lasts too long. Anything more than that (needs to be hand washed, too lazy to open the DW) can easily hide in the sink. We love our sink tip-out for scrubbies, and hang our dishcloth in the sink (scroll down to the bottom of the attached link). Here is a link that might be useful: dishcloth solution

I would leave the pony wall due to there really is not that much room for seating as is. When people seated they will be out in the walkway already at bar heigth with stools. Plus, there's a lot of useful electrical sockets within the pony wall above cabinet heigth. If lose pony wall, putting electric in cabinets, will lose valuable storage depth within cabinets. What I would do now is replace the backsplash. The countertop is ok, imho. Countertop will look so much better with a brighter less pattern backsplash. Suggest moving in & seeing how well the kitchen layout feels while using for a few months at least. They may like the L shape as is. Make sure they love the cabinet color & style & they all are in great shape,too. Then & only then would I invest $$$ into new countertop. If they want to keep a Lshape kitchen all one level with more leg room then shift peninsula cabinets 12" or so closer to stove, but that's a lot of work. Plus, kitchen will get smaller, but seating would be better. Hopefully there is flooring under cabinets or enough left over. Maybe some can be taken out of closet or can find exact flooring match. Pros & cons to changing layouts is common. They may not like the layout after using. Then save up for a new layout then remove pony wall. They may want to consider getting rid of the L shape layout & get an island instead. Hope that helps. Nice of you to help your niece :)

Thanks for input. Removing backsplash not an option & of course decisions are easier when replacing all! But, sounds like your idea is to tie new counter in to backsplash color. The backsplash & granite do look more color complementary to each other when seen in person! The granite background isn’t as white as appears & is warmer. It’s Santa Cecilia granite but the lightest example we’ve ever seen of it.