Will there be any seating under the overhang (e.g., a sofa placed under it)? Counter seating? Might be an idea, btw, since it's a rec/computer room and the kids could eat snacks there. With that much overhang behind the sink, I think a single level will be fine and will actually be more functional in the long run as well as easier for everyone to reach food or other things on the counter, regardless of their heights. As to how high to make the opening...since you're going to make it much wider, I think opening it up to the ceiling will give you more of an open feeling in the kitchen as well as connect with the children in the other room better. B/c of the wider opening, it should be to-scale. If you're concerned about the view from the back door, then when you "gentrify" the door area, consider a frosted glass or wood partition (depending on room style) b/w the door & comp/rec room that will hide the sink from immediate sight. I like your idea!

Ok, could you zoom out and take a picture of the entire unit? Is this wood frame/drywall construction, or something else? What is it that you want to accomplish / how much are you willing to spend to do it? Here's the thing: Yes, I think you are correct, they put a replacement window inside the frame of an existing unit. Clearly this was done to "get in and get out" without disturbing the drywall, etc. and it doesn't look great. The alternative is taking out the window, removing the metal frame, possibly getting into some drywall, exterior siding, etc. and getting a new window unit that fits the opening.

Just thinking outside the box. You seem to have a lovely sitting area in adjacent room along with a fireplace. Consider if you set this up as another sitting area and spending a fair amount doing do so, will it be used very much. Maybe consider a space to enjoy tv/PlayStation, games table, foosball, etc. and can be a great spot for the grandkids but with bar area nearby, it will a spot enjoyed by the adults as well. We had a small pool table and it was pretty popular. Table below has multiple uses and can be easily stored against the wall. Bean bags are pretty flexible and can moved around when room being used as a guest bedroom ir when not in use for better flow. A floor plan will also be easy to work with - if you moved the Murphy bed to wall where couch is, the entire other side of room is now useable space as the leisure area - tv on low unit between windows in a wood tone to match bed

Anne Duke-- is your neighbor happy with her shutters? LllDesignworks--I like #4 but doubt I have the height in my 8' high ceilings to be able to pull off something like this. #2 seems most realistic to me. Sounds as though ApplePie and KW think I'd get the best sound barrier with the folding option. Thanks to all of you.