Thanks everyone for their comments! Update: husband has 'over-ruled' on this one. Forgot to mention that the vanity top will be Night Sky Ceaserstone (ie black). So he wants the dark grout. We will definitely be using mould inhibitor and ensuring everything is well sealed. It's all his fault if it looks horrible ;) Will post photos once fully complete. (I am now a little scared...)

Thank you @Creative Style Interior Design and @bigreader @Creativelychallenged - Thank you for your nice words. We are indeed very happy with the result. We also went through all these stages you describe, so don't feel depressed... there might be light at the end of the tunnel. Our research stage was so long and quite discouraging at times. We've always wanted to live in a queenslander, but our house is not one. This didn't stop us on going ahead adding some character to our bathrooms design (and kitchen). We started with the idea of making these bathrooms with a colonial touch but we found that it was not easy to find the elements we wanted (tiles, furniture, tapware) at a cost that would fit our budget. We learned that the type of tiles we liked (encaustic) were VERY expensive ($200+), traditional looking furniture was also very expensive... So we shifted to a more modern design...(not very happily though), and after a while of collecting ideas for modern tiles, furniture etc.. we felt quite depressed because we were compromising... updating our bathrooms with something fresher, but far, far away from what we really liked. In our view modern furniture looked very plain, streamlined and... boring, but we were doing 2 bathrooms (on a budget) so we were not prepared to spend a fortune, and we settled with modern. We ordered marble type tiles for the floor 900x600, and wood like tiles for the walls, and booked the builder to start demolition. Luckily for us National tiles called us saying that there was an error and the tiles they promised were not going to be available for 3 more months!!! Depressed again.... It took us so long to find something we liked (kinda) and now we were back to square one. Then my lovely wife said... Why don't we give it another go and try to make a more traditional design as we originally wanted.... So to make it short... we went back online with 'refreshed' energy and pressure (demolition already started) and found many things I coudn't find before: Floor tiles @ $25/m2 Subway tiles for walls @$16 the box on sale... Ensuite furniture and basin from Ikea Main bathroom furniture was an antique dresser we found in an op shop for $150 repainted and repurposed.... etc... In the end we spent approx $12,5K for both bathrooms in total :-) So, to summarise... don't dispair... just look in this website, on pinterest, magazines, google, etc... Play around with ideas and copy!... (you'll see that our ensuite is quite similar to the first photo in this discussion)... Good luck! :-)

Sounds like a very stressful situation! If there is absolutely no way the builder will allow you to change things (even if they did, I imagine they would ask you to foot the entire bill of pulling the tiles down and replacing all water proofing in addition to new tiles), I can make a few suggestions for improvement. Firstly I would suggest replacing the tiles above the vanity with a white mosaic, a patterned or a textured feature tile/strip. You could also use this same tile to replace the vertical feature in the shower. There are some beautiful shapes and sizes available to choose from. Secondly I would address the grout situation in this way: Floor - dark colour grout & Walls - Light colour grout. Lastly if it does not prove too difficult or expensive, maybe replace the tiles below the vanity with a plain white tile (could be similar size). Good luck and I am sure once you have a lovely mirror up and some crisp white towels, it will look just wonderful.

I'd just live with it, paint the walls and vanity your sage green. My decision would be based on the fact that getting rid of the pattern is either going to be extremely time intensive or $$ intensive for not much gain. You can leave that pattern and update the bathroom easily by painting walls and vanity. The only way to get a nice finish on painted tile is to have it resin coated professionally. It's not cheap. With a stone toned bathroom it's always going to look dated because that colour way has been out of fashion for about 30yrs anyway. Best to just update cheaply and refresh the whole bathroom once it's no longer servicable. You spend on average 30mins a day in the bathroom. If it's neat and clean that's good enough. Close the door on it after use.