Lovely house with so many possibilities. I think using the wood room is the wisest choice as it abuts the kitchen which makes it handy yet large enough for a group sitting. Most would prefer the larger room for the living room family space. What a luxury to have an older home with lots of space.

Ah, so you do have another space for lounging/TV watching. If you're pretty much sure you'd rather have a TV here too-I'd be satisfied with a (say) credenza or something to host a smaller size TV, which you can surround with some shelving with books, or maybe art..you can bring in plants-a lot of them..lots of interest since some of them grow like crazy and are virtually indestructible..)) and they always look at home-any style, any room you take, you can't go wrong with introducing plants, Remember Clifford Simak's purple flowers? lol you can paint the walls..you can wallpaper them if you're brave..you can put a mural on-there are some amazing ones. there are many many ways to make this room interesting. also don't forget-you look at it now while it's empty. but when you'll actually live there-you'll have furniture, fabrics, books..now it's a blank slate but it won't stay this way. it will be you and your family plus this room. it will be interesting enough without the feature wall. which you still can decide to do-I continue to think these wood planks are way cool..but they might be too overwhelming..and I would think very carefully about how to incorporate them, and whether it's worth investing in. That's personal of course and you might find that yes, you really want it, TV or no TV. Then I'd introduce more of that wood around..maybe wooden frames on art? maybe woven shades in the window? maybe painting the mantle another color so it'll blend more with the walls? And I'd use this plank wall more heavily then if I decide to put it in..it's a big space, and it might be useful and very very cool to have more on it than just the TV. Whatever you decide-it's exciting. Lots of possibilities here. And yes you're right..you don't need to match the wood finishes. You do need to consider how they will look together..in rare instances mixing just doesn't work. Say red mahogany or similar very expensive woods..)) find it hard to incorporate lol. Passed on amazing nightstands several years ago..the most useful amazing high quality nightstands I ever saw(on Craigslist)) but they just didn't blend in, what can I say.. But I don't think that's your case.

I my last "big" house, I had a 2 story ceiling with a very similar window layout. I never actually did this idea, but after I had lived there awhile, I thought the ceiling would be a nicer feature if I had one or two chandeliers, simple, modern style, hanging down quite a ways to make the proportions more manageable. There were can lights there, so the wiring was available. I moved before I was able to implement that idea, but that might work out for you, too.

What do you think about turning the rug 90* (centering it on the fireplace), and then switching the TV and the sofa, so that the sofa is across from the loveseat, and the TV is across from the fireplace? I love the look of twin sofas flanking a fireplace! :-) Also, consider mounting your curtain rods so they are just below the sconces, and extend beyond the sides of the window by 8" or so. I'd buy longer drapes that kiss the floor, as well. :-) I'd let the new rug or a great piece of art decide which direction to take the pillows and paint color. Pick paint last.