So her concern is that if she paints the inside of the loft bedroom a color, say gray, and the stairway a different color, when you are in the bedroom, you will have a gray wall with two "windows" showing the stairway color. Honestly, I think this could give the loft bedroom some design interest. Just as the brick wall in the living room is an accent wall, the wall with the two "windows" becomes an accent wall in the bedroom. How does the brick wall tie into all of this? Is it visible from the bedroom? What I'd do is sort of a modern take on color blocking. Find a color for the living room that goes well with the color of the brick wall. Then find two more colors that coordinate well with the living room color. One color in the living room, and maybe that same color in the kitchen (a lot depends on how the space is laid out). Then the second color in the hallway and stairs. Then the third color in the bedroom. Good friends of mine did something like this in their very traditional house, with a center hall, a living room opening off to the right and the dining room opening off to the left, with large archways. The living room was a dark brown, the hall a mustardy gold and dining room a sage green. The colors all worked well together and clearly defined the spaces.

Here's a nice example of a monochromatic palette, fireplace and television on a nice console. In your space I think there is room for yet another chair and tables. Rather than a glass topped coffee table, a large upholstered round ottoman/coffee table would be a good choice with this set up and youngsters. Look at sofas with removable/washable slip covers for comfy use with family. Some color in pillows, art and lampshades would also be considered. Here's a look at a slip covered sofa from the Houzz shop: https://www.houzz.com/products/sunset-trading-horizon-slipcovered-sofa-linen-prvw-vr~32091784

couch and love seat across from each other toward the fireplace or the couch facing tv and love seat on left wall. I would probably opt out of the love seat and try to get two smaller chairs since you are limited on space. I would also consider a round table rather than square. what are the dimensions of the room, the couch and the table?

Thank you all SO much! Really wonderful to read your suggestions and get input. Much appreciated. And makes me feel there is potential for this space. I never considered a bigger rug, but will do so now as that seems to be a repeated suggestion. We will also take another look at the the height of that mirror on the side wall (above the mantel is a actually a large framed photo that I blacked out for this post). We did experiment with turning the dining table the other way, but it didn't feel right and seemed to block the openness of the sliding doors. And I was leaning towards an upholstered bench behind the couch (for a casual spot to sit with the added bonus of storage for blankets inside), but perhaps that would be odd? Again, thank you all. Keep the ideas coming!