I'd presume the combustion fireplace is a built-in unit. I remember ours heating the bricks up quite well. I don't see an issue plastering the brickwork but look to use 'Fyrechek' which is a fire retardant plasterboard. The bricks could also be rendered instead but I reckon you'd be able to pick the different surfaces once painted. I wouldn't think you'd need a heat resistant paint. The walls would be warm but no warmer than a wall copping direct summer sunlight.

Just a comment on the north / south discussion. It's really worth looking if you can get your living areas on the north side even if it means having to move your driveway. With the right eave widths you'll get all that lovey autumn/spring/winter sun and be able to keep out the summer heat.

hi we have about six months ago now, re done our bath room , similar size to yours, and , i can take some photos and email them to you , we have maximised space, and walls , put in a white stone bath under the window , it is a metre in width , with a cool water spout coming off the centre under the window we pu t afalse ledge in to sit , candles etc on , , we tiles floor to ceiling, off white , wall mirror cabnit with three mirrors , inset into the wall so its only sits out a we bit from the wall tiles , floating bath room vanity , so that it makes the floor space look bigger , . matching stone square basin sits ontop of the vanity to one side so plenty of room to sit all your bath room stuff when need be , seperate shower all tiled as well , with inset , shelves for shampoo etc, also , when you open the bath room door and walk in when you close the bath room door behind it next to the shower is a very narrow floor to ceiling shelvec for towels, now the hole is there we jaust havent got the shelves put in yet. , we gt loads of comments as the bth room dosent look small evn though it is , , most expensive item the sqwat extra wide stone bath , made to order basin / tap ware and shower spray thing ,oh and the white stone vanity which we had made to order as well , due to the sizing .

I suspect you have lovely hard wood frames and studs underneath. I'd strip back right to those, they'll give you a great base for resheeting. More importantly it will give you a better chance to make everything square and even for tiling. And yes, while you are there strip back above the picture rail.