It would look odd with just a curtain rod across the void. You could get a pelmet made, or fill the void above the curtain with a shelf or cupboards though this will involve a little disruption. I would avoid plastering too as it is a messy process that takes more than one day and needs painting too. You may still want blinds on the windows for light control but soften the whole look with side drapes as you asked for. Shutters could also work either way but they are pricey.

Mine has a sink, dishwasher, and pull out wastebins. All good. What I should have done was insist on more cutlery drawers and some pot drawers instead of under bench cupboards. Not a fan of underbench microwaves so didnt ask for one.

Bay Windows can be gorgeous but need more space away from outside footpaths and driveways to look best and the new framework would have to be about 75cms out from the existing outside walls to include a comfortable window seat..and installing a new bay window in an existing window may not be cheaper because you have to first remove the old window and then custom build a new structure and window to suit the available space so it may be better to consider another position around the house, even if it means removing a solid wall..look for a wall space at least 2m wide with at least 1m plus a footpath width clear space outside, preferably looking onto the back garden not the neighbour's side fence

a custom made window short enough to allow space for a built in seat should be able to be made to replace the original living room window within a frame added to the outside of the building (check "bump out" and "modern box windows" HOUZZ photos) but, following on from previous concerns, the stairs will need to be rebuilt and will depend on the distance available both along the front wall and out from the present position..see attached rough draft...you'll also need to check with local council to ensure that your proposal is legal (you may need to make a Development application because there'll be a change to the outside wall and the "streetscape") and then discuss with a builder to clarify possibilities and prices