I work in tiles and the normal splashback height is 600 mm. This is because overhead cupboards are usually this height above the bench top. In your case you don't have this so can do anything you like. If you tile to low 200mm etc the wall gets damaged - paint doesn't wear like tiles. There are many materials you can use as a splash back but most aren't durable eg Perspex. Glass and tiles have the edge. Textured splashes are in hence the hand made tiles. If grout annoys you use large tiles you can get them up to 1200mm long these days with rectified edges you only have 1.5mm gap. Use sealer on the grout, they are now easy clean. If you have the money tile to the bulkhead a much more luxurious look. Maybe in a charcoal. I don't know how these gaps are getting so dirty. I use spray and wipe with a toothbrush occasionally and it takes little time and always clean.

It's all about proportions, the individual space and how it works. If they are directly above a bench top (or table) you can get away with hanging them a bit lower than normal because you don't have to make sure they're above head cracking height, but if they are above an island you don't want to have to be constantly peering around the pendant lights to talk to someone on the other side.

Looking at adding something like this onto of the wall. Perhaps increasing the balustrades and incorporating the timber or aluminium slats with a new electric gate. So still has some level of privacy with some plants on the footpath side. Plants an hedges inside the property hopefully to reach the height of the fence in time.

Is there a particular reason you want to lower the alfresco height ? If I had to make a choice , I'd almost prefer to go for 2.7 indoors , 3 metre alfresco , because thats where you want that open feeling , the luxury of space and height , moreso in in an alfresco . As far as being noticed , the only time it wouldn't be too noticable ( IMO ) is if the alfresco floor was lower than the house level -- if you step 'outside' through a standard or sliding door , and the roof feels lower , I suspect you would notice it . That , afterall , is why you go for a 3 metre inside height , to feel open and spacious .