In our family, the tv is the focus of our basement room because watching tv or playing video games is primarily what people do in our rec room. We put the fireplace in the corner and then have the tv centered on the wall (where you show the fireplace in your plan) with the furniture facing it.

Great ideas @havingfun! Thank You! It's funny, we started physically moving some things around down there, and I'm starting to think the TV should indeed go on the far wall. I'm just worried about it creating a black hole at the end of this long room. Are you suggesting dividing the room into two sections? Like a TV section and a fireplace section? "face couch or appropriate chairs towards the tv. appropriate chairs or couch to fireplace" and then a rug in each section? I like Bohemian, vintage, rustic, industrial styles I think. I liked the first and third rug you suggested. Maybe light bright rugs and warm darker furniture? We really like the idea of leather sofa/s, like the kind with the nailheads. We have cats and friends, so any anti-stain, non-fur grabbing furniture is what we are looking for.

I think the sectional is just too bulky for the room.. would it be that bad to leave the TV over the fireplace? what are the actual room dimensions? If you hang the tv on the short wall you need to have a way to watch without straining your neck.. what is the width of the room from fireplace (with the hearth) to the wall? option 1 - get rid of the sectional (yes it is comfy but bulky) and put a sofa facing fireplace, get 2 swivel chairs (recliners or not) to either face the tv on short wall or swing around and face the 'people' sitting on the sofa and a narrow ottoman for additional seating.. sketch the room on grid paper with as exact dimensions as you can.. option 2 - leave the TV above the fireplace but i would still replace the sectional with a sofa and chairs so you have more walk through space and the ability to move the chairs if you need to.

Do you see potential problems with the couch/sectional not providing a lot of space between the hallway and the room? Or perhaps I need to find smaller furniture or move the couch closer? I think the previous owners also made the room a dining room, which is why the chandelier is there. However, not pictured is our kitchen that openly connects to a room with a fireplace, and we're planning to make that room the dining area. Thank you for your opinion!