Oh dear! We have the same type of fireplace, except mine is double brick. I think you should definitely paint the cavities the same colour as the walls, the existing colour seems to chop it up and makes the area look smaller. I love the idea about the stone look wall paper around the fire. I would check with manufacturers instructions beforehand, fires put out a lot of heat and ash and my guess is that it would ruin the wall paper (you didn't mention if your fire was real or gas log). I think Mitre 10 and Bunning's sell a product that's stone cladding ( its DIY) you glue it onto the wall, it looks amazing. A timber mantle above the fire would also look great. My fireplace has shelving either side in the cavities, it seems to balance it out otherwise you have 2 great big empty areas. You could align the shelving or stagger them depending on what look your after. If you go with the shelving idea I would put a couple cushions each end of the cavities near the ledge to encourage people to sit. Fires are meant to be warm and inviting. Lastly I would put a rug in front of the fire to protect your carpet. Good luck! Make sure you post some pics.

Lovely! How is the polished plaster manufactured?

first contact the manufacturer for advice

how far is it to the corner to the left of the heater..can you hang a TV on that wall? but i don't think this type of flue was intended to be enclosed but check directly with the manufacturer for specific installation instruction for this heater to avoid any fire risk..the alternative could be to move the fire to a more convenient space or invest in a new heater and maybe if you post house plans with dimensions we can suggest an alternatiove location