Thanks all for your advice. Ive included some renders that I made with view along the corridor with and without the bulkhead. I don't think renderst does it justice until you actual walk through @ frame stage. I agree that ceiling height and comfort and look, depends on climate, orientation, insulation, relative proportions of other parts such as windows/doors. Because of the Melbourne climate, we have planned for double glazing, and good insulation with R2.5 batts wall, R6.0 ceiling. We have 2.4m height of windows and door around the ground floor which is btw 3 to 3.6m so I think proportion wise should be ok. In the family where it was always planned 3.6m from the start, we have a band of clerestory windows too. We have decided not to be too excessive with windows ( ie 3m and even 3.6m floor to ceiling - how grand would have that looked though! ) to minimise heat loss during winter. Energy rating for house is 7 stars so far. Thanks for giving me the pro and cons - I have some more confidence to let it stay at 3.6m throughout now.

Renovating or restoring as many Victorian features as possible .....Should the 3300 section of your hallway have the original cornice, retain/restore, Many Victorian terraces have a bulkhead along the hall with arch and corbels.

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 .

If you are referring to the plan posted on another discussion, you only have three windows on the facade, so it would not be a big design choice. I personally prefer 2430mm doors and windows with 2700mm ceilings, and standard height window and doors for upstairs 2500mm ceilings. But every increase to window and door height costs more money, so it goes back to budget.