If you google "faux fireplace" there's lots of ideas on how to use it without an actual firebox, if that's what you're thinking. Here is a Candice Olson design where she used a mirror and candles, but I think it would be even better with an antique surround.

Take a pic of a simple sketch with measurements of each wall section. Wondering how much wall room is behind the drapes beside the window? Not a pro, but if it was my room I'd consider this. Sofa table or shelf under the window gives the option of one or two table lamps. Add a sofa with slim/straight arms, no skirting, neutral colour, can be deep seated & cushy if you want. For your books, maybe a shallow clean lined vertical shelf unit left of the fp, painted the same color as the walls or walnut or teak shelves to tie in with the fireplace color. Large wide art piece over the fireplace to distract the eye. Two swivel or small footprint chairs across from the sofa, oval leggy coffee table. Flexible stool as suggested above for guitar player etc. Woven blind on window with linen like side panel drapery that don't have to close, same fabric drapery panels on the patio door that will close if you need them to. All depends on your measurements. Slim armed sofa, oval leggy table, curvy chairs, bold art in pic below. Note the wall shelf in pic 1.

Thank you all for your suggestions. Like a few of you, I was also thinking that the shelves were nice as is with nothing on them, but I was worried I had just gotten used to seeing them empty. I do agree there is room for a nice display at the bottom area. The center area is for a TV. The bottom area are cabinets, there is acid washed glass in them. I was a little disappointed that they seem so bright, but at this stage of the build, I will see how I feel after the furniture is in.

I agree drywall over the TV thing and either get rid of the mantel or replace it with something much thicker . I happen to love MCM so that FP without the TV niche is perfect IMO. I do not think the interior of a house has to match the exterior but MCM architecture is my fave so I do the inside to match.