Maybe stucco from top to bottom. Thats what I when I redid my brick fireplace to tear out the mantel, add a raised hearth and install a wood burning fireplace insert. Very inespensive and having one material floor to ceiling doesnt cut the room height in half visually.

Wacky Tacky, interesting take!  Never thought of it as 80s tile.  Its not my favorite tile and I certainly wish it was wood but I'd really like to avoid tearing out the whole floor if possible. 

And yes, nycbluedevil_gw, the chimney needs to be dealt with but I haven't even thought about that part yet, trying to figure out this floor first. Stucco is a good idea.

Sorry I was focusing on the vertical element not the floor, which your question was about. I agree though that you should rip that white tile out. It is terribly dated and will be an eyesore once you have new material for the chimney and the floor around the fireplace. And whatever you put on the floor for a hearth will be yet a third material. Too much going on. So I would just do the wood in the kitchen unless you want tile in the kitchen, in which case you can find a kitchen tile which you can extend to use as a hearth tile too.

That white tile doesn't work with the rest of your area.

Can the floor wait for a little bit? My first choice would be to extend the hardwood into the kitchen. Second choice would be to wrap the hearth all the way around the chimney, IF the hearth is the same material or at least color as the chimney. So I’d want to decide what the chimney cladding will be before moving forward with the floor. What I’d want to avoid on the kitchen is side seeing white tile transition to another color (eg black tile), then transition again to chimney cladding (eg red brick).

Sofia good point.  I think most likely we will skim coat the chimney and paint it, but we could also do wood siding (painted) on the kitchen side.  Probably will skim coat that brick as well, it's not in great shape.