Hey there Anthony, what did you end up doing with this space? Bit of a tricky space!

The charring of wood as a method of preservation is nothing new and was known to European and Mediterranean builders as well as Asians. I have for years charred the bases of deck posts and such as a rot preventative. The practice is mentioned in John Fitchen's classic book Building Construction Before Mechanization. Some of the samples of this shown above are a bit crude. The most beautiful finishes of this type are rather labor intensive as some of the char can be brushed back off to some extent to reveal wood grain. The planter shown below has been coated on the interior with linseed oil, blackjack and turpentine and then set alight with a roofer's torch. The finish is cooked into the wood producing a carbonized insect and decay resistant surface. It gets filled with soil and so the char will be seen only at the edges.

all heaters and stoves should have very specific installation instructions including distance above the stove to any mantlepiece and i suggest you start with advice from local suppliers and then confirm with specific written instructions from each manufacturer that you can usually find on line...There are a number of heaters that have wood fires that are designed to be inbuilt in a purpose made wooden frame so hopefully this can be done inside your opening

Our last house and our current house both had wood floors and lots of wood furniture. Using area rugs (I've got a weakness for oriental rugs) provides separation between the floors and the furniture. And if the walls are light, as in LesleyH's photo above, you will certainly not feel overwhelmed with wood. The only time there's an issue in my mind is when the walls are also wood clad - that can be a bit confronting and needs management.