We have raked ceilings in our new split level extension that follows the fall of the land (and in the rooms that were part of the skillion sections of the old cottage) and I love the sense of space they give and also the fact that the inside reflects what is happening on the outside of the house. We have used ceiling boards (painted white – I didn't want to feel like I was living in a cigar box) both in the old cottage and in the new section and they certainly add an enormous amount of visual interest to the rooms as well. However, I endorse the comments about the added trickiness of light fittings. Pendants with rods are out and pay particular attention to the little rose/canopy thingies that connect pendants to the ceiling – make sure that they sit flush with the ceiling and don't have weird unsightly bits that you can suddenly see because of the angled ceiling. We have successfully used LED downlights with a recessed diffuser and dimmer switches to make sure there is no glare but if the raked angle isn't too extreme they are a definite possibility.

Looking at the first below I'd say, to be on the safe side, the bedhead should show half to three quarters above your tallest pillow. The second photo I believe shows too much bedhead.

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.

Get a builder or engineer -- do you want to raise 1 room , or the whole house ? Is there sufficient cavity space ? Most 1970's houses would be roof trusses at a guess , so difficult/impossible , likewise you have said about lowering the floor -- again , real difficult , even if the floor is on beams like that . If ceiling height is a deal breaker , look elsewhere -- in fact , I must be getting lazy , but these days if I look at a house and I have to start thinking of half-pie serious alterations , I will keep looking .