I would keep that size but find a rug that has peach in it to add some pop to the color scheme in the livingroom. Also, I would consider painting the coffee table peach or an accent color from the new rug to tie it together. Also replace the rust colored pillows with a pretty accent color from the new rug and get a throw for the sofa with that accent color in it. The room needs some color/contrast in it. Alternately, you could find an area rug that has red/cranberry in it and tie it in with picture on the wall that has that same color in it. That would look nice.

Nice room--I like the fireplace and woodwork!

I would go with a 9 x 12 rug in a traditional oriental pattern, in earthy colors.

Here are some ideas, but you should go to a reputable carpet store where you can see the rug in person.

Handmade Pure Wool Ersari Turkoman Elephant Feet Design Rug, 9'10"x13'6" · More Info

Safavieh Vintage Hamadan Collection VTH211 Rug, Red/Multi, 8' X 10' · More Info

Hand Knotted Nir Wool Area Rug Oriental Cream · More Info

Antique Persian Heriz Handmade Mint Condition Oriental Rug, 8'6"x11'7" · More Info

Peach paint not IMO ever for furniture . What is wrong with the rug now other thsn it seems very modern in a vert traditional space . I think the rug size is okay . I think I need more info and it would be nice to get a bit of upgrade in the space with less posters and more art. Take clock off the wall please .The drapes IMO do nothing for the space and the fact they are puddled does not work with the decor either . So give me the info I need and some close ups of those interesting chairs . Post all of the info and the pics here in comments DO NOT start another post.

This room has a lot of character.

With a dog who damaged one rug already, consider Ruggables washable rugs. Their covers are easy to replace.

For an update, start by removing all the knickknacks, candles, and pillows. Put them on the dining table, stand back and take a look at the room. Choose one pair of candles and one color pillows. Then add some fresh or dried autumn flowers or gourds on the coffee table (if dog-compatible). Decorative items that change with the four seasons bring fresh looks to the room.

I love Diana Biers' suggestions.

IMO your room needs a revised layout.

I'd remove the overhead fan light. The quality of light is always horrendous.

The darker oriental patterned rug would work very well in there. Is the dog damaging the rug or merely getting it grubby? That would impact what material you get--and what you spend.

https://www.wayfair.com/rugs/pdp/gertmenian-majestic-vernon-traditional-oriental-floral-wide-border-area-rug-w100636555.html?piid=652469353

I like your existing rug with your upholstery selections. You could keep and clean your existing rug and simply layer it on top of a sisal or hemp rug to cover more square footage in the room.

Once you jump from 8x10 to 9x12 there is a big difference in the $$$

I totally agree with Beverly regarding that overhead light. No room ever looks good with that lighting………use lamps. The curtains do not work. I think that they are too dark and offer no privacy….i do not like dark holes.