Thank you everyone for your thoughts. My fiancee would really love to have the room feel like one large space if possible, and so we're trying to see if we can make it work with one large rug, if possible. We would also like to soften the space as much as possible, and provide some softer landing spots for our pups. I agree with Yaya about the couch I posted. I like the look, but comfort should be just as important. I'll keep tossing around new ideas. Thanks again!

Someone posted about vent extenders so you can redirect air from under sofa.

Agree with lynartist get someone knowledgeable in to look at the walls. Shifting the color used makes a huge difference. I would not have the walls smoothed or made shiny. But there are all sorts of ways to approach this and end up with a great looking home. Consider moving the functions of the two spaces. A modern dining area with a fireplace, even such an ornate one, could be spectacular and marry well with a more intimate USED space for conversations, drinks, and even just solo book readin'! Making the switch would also de-emphasize the fireplace and allow it to look its very best. A bit of a paradox but look at many old European houses and you'll see it again and again. My other preference would be to have a wood refinisher take down the shine on the floor. Congratulations and I hope you let us know how this progresses.

R Tews Constuction & Design makes a good point and it may be something to consider - the idea of putting tv up high with little ones afoot. I don't know your reasons for not wanting to mount tv over fireplace; but if it is a height/viewing angle issue, using this mount, or similar, would solve that problem. https://www.amazon.com/MantelMount-MM340-Above-Fireplace-Mount/dp/B01MS1MHET/ref=asc_df_B01MS1MHET/?tag=bingshoppinga-20&linkCode=df0&hvadid=&hvpos=&hvnetw=o&hvrand=&hvpone=&hvptwo=&hvqmt=e&hvdev=t&hvdvcmdl=&hvlocint=&hvlocphy=&hvtargid=pla-4583520382126070&psc=1 And you could hang some art over tv, when not in use, if you'd like.