I'd go white cupboards, with some timber somewhere to tie in the terracotta. Yes, remove the high bench and open it up with a large top with stools. I have baskets on my bench top and they are great for hiding all the stuff people leave on the kitchen bench:)

Not sure about removing the high bench... if no traffic issues, I'd perhaps widen the overhang and acquire a couple of higher stools. I imagine visitors/family stand there and talk with you and it's a convenient place to put platters etc to take outside as well as a good height to write notes etc when on the phone. I like the way it adds an extra dimension and defines the kitchen space.
It's a good, practical, kitchen in a well maintained home.

Cosmetic changes for me would involve changing the bench-tops and doors on the cupboards.
We had the bench-tops in an older home re-surfaced with a granite/resin product that has been absolutely great, especially with tenants now there - it doesn't stain, burn, or wear and they are able to put hot pots directly on it and no fancy cleaning regime needed. Lots of choices to fit with a new colour scheme.
Have fun.

I would definitely widen the bench and get rid of the high back. Put counter stool and white cupboards - maybe a light coloured granite or manufactured stone benchtop. Getting rid of high back will open the room up, give much more work space and a more modern sleek look.

Your fridge is obviously stainless steel & your oven is black & stainless steel - this will determine your colour choices unless you are going to change them - work from here - if you don't like the blue anymore - check out paint swatches to see what colours you like against the fridge colour & then go with them for the rest of the kitchen - you need some pop of colour - the idea from the granite/resin product above sounds pretty good - change the colour of the cupboards.

I'm not a fan of terracotta tiles. I did a search on houzz for terracotta tiles to see what others had choosen to compliment them. You should be able to find a room that inspires your colour choice. Have fun decorating :)

The high breakfast bar is dating the kitchen. Yes it hides mess but that's a small inconvenience and just encourages you to be a bit tidier. You could get Granite Transformations in to put a new wider craft wood bench from the sink around to the end then they can apply granite or Caesarstone veneer to the entire bench area. I have used it in a previous house and it was amazing and looked like solid Caesarstone. The edges are mitred and you cannot see the joint and you save a bundle. You can paint the blue laminate or get it sprayed by a professional or just keep the carcass and get new doors for the kitchen.and new hardware..

lose the black benchtops, they suck in the light. go for a light colour stone to bounce around the available light. new handles in brushed stainless, say straight 'd" rather than the curved handles. fronts white as well

Keeping things cosmetic will mean that. Angled dwarf wall will need to stay, if not refaced. With terra-cotta tiles that look to be laid around your joinery, your footprint will remain, and replacing doors won't address the side panels of the wall oven Adjoining the cabinets, as to replace this, you need to uninstall the back units adjoining them, so it is almost a rip out and refit. The alternative is paint. Without correct and proper priming products and aplication, this is risky, doors and end panels are quite easy, hoer adjoining wet areas or heated panels, unless you use the right product things can go wrong.
Fr light, all horizontal surfaces boulder reflect and bounce light around the work surface, so light, stone is great, but will cost what a new kitchen would, if your painting cabinets, a stone top may be an over capitalization, replacing your doors with new and a laminated top would have an overall improved aesthetic instead, and save stone for a future new layout. That's not to say the bar top couldn't be. I would use this dated feature to create a new one. A stone waterfall or slab end as their known would help draw your eye down to your floor, and provide a contemporary element to clad. Go with a chunky stone edge build up, say 60mm and then it will frame the back wall area to display a feature material, in this case, I suggest a horizontal timber plank. Yu could do a laminate, but a pack of engineered flooring will provide the character aswell as durability, choose something that ties into your floor, and this could be used elsewhere as a feature. Re tile over your spalshbackin, and if you go with all white cabinets, consider a patterned or aggregated white counter, with lint cabinets, then a stone to in a solid white, to stand out against the patterned laminated benches.
Or opposite for te same reason, the bar top is what will be touched and stone does that, so an interesting pattern, pebble or grain would add to the interest, and plain white laminate in the practical space will juxtapose this.
I would think of using a vinyl (thermolaminated) profiled door, something simple. Like a square shaker style door, both modern and classic but not old fashioned. It will create focus in the kitchen and again front he simplicity of the Benchtops, The splash back could be anything, but subway are great I agree, there is also a DIY acrylic sheet from laminex called metaline which can be installed right over tile, you can even co yourself or have the cabinet maker do it. It has the appearance of a glass splash back with great colour choices. There is a pewter or grey metallic like argente perle, which would tie in your stainless appliances making it overall modern and clean.
Good luck?

Hope you do well!

This is what we ended up going with - and have been really happy with the changes - much more bench space once we got rid of the nib bench, and the sink is still 2 bowls, but with a drainer that sits in one side so not to take up all the space it used to!! New gas cooktop, just because! I also love the timber look tile splashback (see second photo). Not exactly what I wanted, but pretty close. Thanks for all the advice - ended up going with Granite Transformations (and just new fronts/handles on cupboards - not complete re-do).

Looks amazing Creativenicki - really great look.