Two layouts. The first is an "L" with an island that seats 5. The second is similar to your idea, but it's a "U" with a peninsula that seats 6. Either would work, I don't even have a preference! (Usually, I do, but not this time.) Note: I don't know how easy it is to put plumbing in the island or peninsula, but if it's at all possible, I would! First, the sink wall is lengthened by building out the wall in the bumpout by 11". That gives you more and better dish storage as well as eliminates those angled cabinets and triangular shelves -- I wholeheartedly agree with you on those! There's no issue with building out the wall as that space is not really used. You still have 12" b/w the bumped out wall and the sliders. . Second, both have a Snack & Tea/Coffee Center in the former table space. It includes the MW, plenty of storage for snack dishes and snack food storage (gets them out of the pantry), and 30" deep counters...really nice space to set up a snack center! You could even keep a toaster on the counter or other items in addition to a coffeemaker or electric teakettle (can you tell I'm a tea drinker instead of coffee!) They would be out of sight from the front entry. The location puts it near the cleanup sink for dirty dishes or water access, close to the main Kitchen area, and near the Family Room for snacking. I don't know how much space you have to work with b/w the Kitchen and Laundry/Powder Room, but it looks like at least 6 to 8 feet, maybe even more. The width could be tailored to fit your available space. . While I put in a MW drawer, you could also put a MW on the counter or hang it from the upper cabinets. However, I like the drawer b/c it will be easy for your twins to use it when they get old enough without having to get a chair (much safer!) MW drawers are easy to use and, in my experience, last much longer than countertop or OTR MWs. (My first one lasted 11 years and only died b/c of "user error"...i.e., I killed it. We replaced it with a second one and it was, literally, "plug & play", a very easy DIY to remove and replace.) (You can use the child-lock on the MW drawer until your twins are older.) . You have plenty of space for a decent sized table as well as island or peninsula seating, so take advantage of it! While island seating is OK for quick meals or snacks, a table is really best for family meals for family bonding, etc., when the twins get older. It's also much more comfortable for long-term seating. . The island or peninsula will work well when they have friends over after school for an after-school snack. It will also work well for homework, something I would not recommend if the range was on the island/peninsula. You also have a nice expanse of space for larger tasks such as baking, decorating cookies, science projects, wrapping gifts, etc. Yes, there's a sink in both, but since they're not centered, you have plenty of workspace. . The peninsula seating has two different overhang depths. 18" and 15" (the minimum recommended clear leg/knee space for counter-height seating), The 18" would be nice if anyone is tall or has long legs. (I wish we had done 18"...we did 15". We're at relatively tall family, ranging from 5'10" (me) to 6'7" (my son). Even I would have liked an inch or so more.) The island seating overhang is 15" deep on both sides. You probably could expand it to 18" on the short side. If you move the table 3" closer to the window. . How far from the wall is the front door? There was no measurement, so I didn't know what was available. What's on the other side of that wall next to the front door? I was wondering if you could fit a closet in that wall. Recess it into whatever room is behind it, maybe. Or, if there's space, work it into the new Dining Room. Maybe even create some kind of separation there. However, without more details, I don't know what will/will not work. . The three primary work zones (Prep, Cooking, Cleanup) are nicely separated and allow for several people to be working in the Kitchen at the same time -- prepping, baking, cooking, cleaning up. This is especially important with growing children! At the same time, the zones are located that the work well for only one person working in the Kitchen. Prep Zones...both have at least two Prep Zones with water access and, possibly another couple without direct water access. The Cleanup Zone could also be used as a (third) Prep Zone with water if no one is cleaning up or unloading the DW, or if there are no dirty dishes on the counter. The primary Prep Zone is in the most desirable space and has the trash pullout. However, the trash pullout is accessible from the other Prep Zones and the Cleanup Zone. (You generate far more trash & recyclables and for a longer period of time than in the Cleanup Zone, so it makes the most sense to have the trash pullout in the Prep Zone. My biggest regret in my Kitchen -- I put my trash/recycle pullout in the Cleanup Zone across a 6' aisle from my Prep Zone and I regret it every single day!) When the twins get older, you will appreciate the extra Prep Zones as you (or your DH) are teaching them to cook and cleanup. Cooking Zone...the range is against I assume is an exterior wall based on your sketch. It makes it easier to vent to the outside. It's also in the most protected area of the Kitchen -- very desirable! It's location b/w the prep sink and cleanup sink in the peninsula layout and next to the cleanup sink & across from the prep sink in the island layout is ideal for multiple-cooks. Cleanup Zone...Dish storage is next to the DW so it's easy to unload the DW. In addition, with the dish storage on the perimeter and away from the Prep & Cooking Zones, anyone setting the table will not get in the way of those prepping/cooking/baking. It's also a straight shot to the workspace in the Cleanup Zone from the Dining Room when clearing the table. Refrigerator...is on the perimeter so someone getting a snack or getting condiments for the table will not get in the way of those working in the Kitchen. It's also close to the Prep & Cooking Zones where it's used the most while preparing a meal. It's better located in the island layout, but it's not too bad in the peninsula layout. Microwave...see the above bulleted list. The info about its location is the same as for the refrigerator above. Here they are! .

You have a lot of different beige/gray neutrals going on (2 floor colors, counters, backsplash). I would probably go with the color that is on the fireplace wall for the entire space or another gray green and paint the entertainment center Hale Navy. Green is mother natures favorite color. Gray green won't make the beiges go too yellow like a blue gray will and will work with the navy cabinets.

I'd probably take the whole thing out and sell it/curb-alert it. You don't really want it, do you? That'll allow you to design your room the way that works for you with a better spot for the TV and you don't have to deal with a fake fireplace.

For now, remove the corner paneling and the flower mural and paint that whole area the wall color (except maybe the upper surface, if it's wood; then white/cream for that, like the fireplace trim). Then treat both levels as a stepped mantel, accessorized as one. Later, if/when budget permits, maybe redo the woodwork around the fireplace to treat the corner area as the mantel and everything below as fireplace surround (as in @housegal200's photo above)? This will need a good finish carpenter with an eye for scale/proportion and details.