I think your curtain example photo is a good guide…the amount of space below the window is proportional to the amount of space above the window. Too much space above and it starts looking like a big forehead. That said, I’m not sure curtains are the best option, I’d go with a Roman shade which would cover the wall above the window no matter how high you hung it ( thus a better illusion of a taller window because the top is out of sight)

Your room is not balanced like your curtain room. If you hang them at the ceiling it will look odd with sooo much empty space above the window--that's assuming the curtains will be open. If they are to stay closed then go for the ceiling. Full panel curtains always gives a room it's most polished look.

Thank you all for your input!

@AiFL, I like your idea of a Roman shade but would it still work if the shade is semi sheer, or would that still look odd/disproportionate because it would look opaque at the top?

I need a semi sheer (curtain or roman shade) in the center to allow light but privacy during daytime, since the bedroom is close to a busy street. The light-blocking motorized blind that I currently have on it will also need to stay on the window because there is a streetlight just outside. And the velvet curtains I was planning on hanging on either side are to block any stray light around the corners of the shade since the streetlight is very bright.

Plantation shutters would look so nice in your room. :)

@HU-655942934 not sure I’ve ever seen a sheer Roman shade, the lack of weight would make it look pretty disheveled, so if sheers are a must, stick to your original idea. Just keep in mind that framing the window is more important than highlighting the height of the ceiling when deciding where to install the curtain rod.