Could you keep the chimney and add a fireplace and then have it be the only structure in between the kitchen and the DR with entrances on either side? Is removing the DR built-in a good idea if it is an attractive original feature? Or is it plain or ugly? If so, then go ahead. You should ask your realtor about the issue of bedrooms and bathrooms because he/she will know what is best in your neighbourhood. Often they will advise putting in a master bath before adding a bedroom. We have a 4 bedroom (one very small), 1.5 bathroom house and the only way to get an extra bath without adding on is to lose the small bedroom. Our realtor said we would not lose money going to a 3 bedroom house because the master bath would be a bonus. Maybe you should convert the one big bedroom to a master suite?

Westond,I'm not trying to be rude when i suggest you reconsider doing this yourself. The point I want to make is that you must have some degree of judgement on what you are looking at while performing a task such as this (largly due to the enormous collective weight of all that brick). At minium one should have have played with legos and dominoes rather than vidio games as a kid to know that the intire fireplace will fall on you if you remove a few of the wrong bricks before removing others from above. The pics are interesting and you have a nice place but I don't need pictures to tell you the fireplace is not holding your house up. Look at your own pics (better still,the house) and it's obiovus the brick in last pic is only one brick deep. I realize the little "soldiers" at top in last pic might appear to be holding the ceiling/floor up but they are there to fill a gap and do not support a thing. There are things that should never be attempted without a basic understanding because you can't get it off the net despite what some believe. Think of it like this,with mortor falling out as you say yours has,the brick would shift and alow house to fall if house was supported by brick in fireplace. Removing the fireplace is a grunt job,hire some experienced grunts and spend your time doing what you do to earn a living or just go fishing. Fixing the hole after brick are gone require's even more construction skill so be prepared to hire a finish carpenter.

@EricHeisel, that sounds fairly normal (although worth considering akamainegrower's suggestion too). Keep in mind: since you have a fireplace you vent through that chimney, you may need to ensure it gets inspected / looked at by a fireplace specialist (or that your masonry contractor has the proper qualifications). You wouldn't want to have that work done and then find out something else needs to be done to meet code/safety regs for venting your fireplace (like getting the structural work done and finding out later it now needs a liner). Your masonry contractor may know this all but check - the structural issues may be different from the fireplace/venting requirements. Of course it's possible your current chimney has a steel liner inside it now, too.

I hope you'll forgive me for saying this, but if that picture shows the kind of house you want, I don't think you really want an 1878 house. It's your choice, of course, but I'd recommend selling your house to someone who wants it for its history, and buying a house that you can really love without having to make expensive major changes (which you won't recoup the cost of when you sell). Economically, that's the more sensible approach, IMO. Either way, good luck!