Depending on your choice of trim, the windows/doors might end up different heights regardless. I was thinking about this thread a bit earlier while we were at our build and then looking at some other houses in construction. As I mentioned upthread, we have 10/8 and 9/6'8 ceiling door combinations on the 1st and 2nd. Our HOA doesn't allow for 10' on the 2nd floor :( Part of the difference in the feel is exaggerated by the stairs going upstairs being in the great room which has a 22' vaulted ceiling. Going up the stairs immediately there are 2 doors which feel low. To try and combat that, we added crown to the family room there to try and draw eyes away from the door frames. Will report back if that works! Keep in mind too that the width of the doors can also affect the perceived spatial characteristics. A neighbor has the same issue with transition, but on their 2nd floor they have a 5 foot cased opening with 6'8 doorway. I know it's a 9 foot ceiling but walking through it after the 10/8 below felt like one of the seven dwarves reporting for work at the mine. A mix of heights isn't terribly bad. Our basement has 9.5 and a mix of 8 and 6'8 depending if it's finished/unfinished areas. In large open spaces the 6'8 seems fine, the 8 is nice to define bedroom/office area.

From what I can tell, the ceiling height above the side windows is different from the center windows so I'm doubtful you can hang drapery panels at the same height on all the windows. It appears that the breaks between windows and transoms are also at different heights. I agree with the suggestion to do Roman shades or shutters and leave the transoms bare. The difference in height won't be that noticeable. Or, mount floor length panels at the transoms, using the same color on the side windows and a different color/print on the center windows to highlight those.

Transom windows are not to have curtains. Privacy is not an issue, they are for added light. In your configuration I would treat them as if the transom's are the squares above the window where the curtain is now. To properly hang the rod just above the casing and below the transom I would split the difference. What's above your usable windows should be treated as a divided light feature of the window below. One panel hung at the ceiling covering both the decorative/skylight windows and the window panes is just not a good look. You aren't going to put a curtain above the fireplace so all those high panes should be left alone. But frankly I think how the curtains are hung now is perfectly acceptable and I would not add more holes to your walls and just get new panels.

Thanks, @Patricia Colwell. I am open to a picture window in the living room as well as the dining room but do wonder how it would look on the outside to have two picture windows "in a row." Also, the head of the living room picture window and the dining room picture window would be different which would be less obvious inside (because of the wall separating the two rooms) but would be more obvious on the outside. The distance from the ceiling to the top of the trim above the existing bay window is 10 3/4" and the distance from the celing to the top of the trim above the existing picture window in the dining room is 6 15/16." Both of these windows face our backyard and privacy is not an issue. Windows on sides and front of house have cellular shades. The windows do have the same trim (2 1/2" colonial) currently. When the windows are replaced, we will go with a 3 1/2" colonial trim aroud the windows to match what is around the doors. I appreciate your thoughts on the grills. I do like them for the style of our house (a colonial style cape). An option may be to do a picture window flanked by double hung in the living room (no grids on the picture window but grids on the flanking double hungs) and a solo picture window (no grids) in the dining room. I appreciate your comments.