By viable I mean workable, functional. A chimney sweep or a builder adept in chimneys will give you a report. Certainly enquire about a future gas fitting rather than logs if possible. I say this as a fireplace anywhere is delightful and, if downstairs, it could heat upstairs through the house, to a certain point too. If you look at the quality of the brick laying, you will see that its not meant to be a feature which is why it was rendered, but that is choice only. Certainly seal the bricks. Good luck and stay with it if you can. Everybody loves the romance of a fire.

I have not read all of the above. It must be tempting to render and paint the fireplace but if it is decided to work with it then maybe you can find your colour palette in the bricks. The new grey carpet will give you a fresh neutral but grey can be very cold. you might need a bit of warmth in the others colors chosen for walls or soft furnishings. If you extend the tile base in front of the fireplace that will give another opportunity to introduce more impact with the tiles. There are always lots of gorgeous tile options. I am loving some of the Moroccan looking styles.

I think if you are gyprocking the room anyway, unless you really want a stand-out feature, personally I would cover it up with gyprock, squared off (so it just protrudes as a rectangle from the wall) and then use either side for storage, and perhaps put a mirror on the rectangle, perhaps with a plant underneath, or an ottoman if its a guest bedroom and that doesn't jut out too much. You might be able to minimize costs by finding some off the shelf storage units that fit the spaces either side. If the room is fairly small, it might feel cramped if you make it into more of a feature than this?

@ann It would be very similar to the one in the picture, with an overall height of 150cm. Cladding is definitely something I considered, maybe white stacked stones or similar. Floors will be dark wood look tiles. @sirius In principle that would work well, but I think the furniture might not fit in that configuration and if they would fit, it would be at a push and block off the walkway to the alfresco.