If you do put can lights in, put them on a dimmer switch. Take into consideration if you want to hang pendant lights/chandeliers somewhere. Maybe not now, but in the future? What would be a logical place for electrical points in the ceiling for those. Another thought, the beam that's running under the strip of windows (above the half wall) would maybe be nice to put uplighters on? Like in the pic below: An ideabook about lighting (there are more interesting ideabooks about that subject on Houzz), follow the link under the pic: https://www.houzz.com/magazine/5-questions-to-ask-for-the-best-room-lighting-stsetivw-vs~8362447

Also in US...Have gas heat in a well-insulated/well-built condo apartment on the second floor...We keep the thermostat at 67 and this past winter, the cost was $30! Of course, we wear wool sweaters and socks and are not uncomfortably cold or warm.

Oh dear! We have the same type of fireplace, except mine is double brick. I think you should definitely paint the cavities the same colour as the walls, the existing colour seems to chop it up and makes the area look smaller. I love the idea about the stone look wall paper around the fire. I would check with manufacturers instructions beforehand, fires put out a lot of heat and ash and my guess is that it would ruin the wall paper (you didn't mention if your fire was real or gas log). I think Mitre 10 and Bunning's sell a product that's stone cladding ( its DIY) you glue it onto the wall, it looks amazing. A timber mantle above the fire would also look great. My fireplace has shelving either side in the cavities, it seems to balance it out otherwise you have 2 great big empty areas. You could align the shelving or stagger them depending on what look your after. If you go with the shelving idea I would put a couple cushions each end of the cavities near the ledge to encourage people to sit. Fires are meant to be warm and inviting. Lastly I would put a rug in front of the fire to protect your carpet. Good luck! Make sure you post some pics.

I love your fireplace. I would not alter it. The door and the floorboards draw your eye straight to the fireplace. I wouod definitely alter the light fittings. I would have the tv on the dining room wall to the right of the arches. I wouod have one lounge on the window wall opposite the tv and a chair in the corner if there is enough room. I would have an eyecatching wing back chair to the left of the fireplace opposite the dining room and white lacy soft curtains softening the window wall. To the left of the fireplace near the dining room arch you could add some interesting decorating piece. I would concentrate on making the fireplace wall the focal point of the room and the tv corner a secondary focal point that is soft and relaxing. You could trow down a couple of beautiful, thick, soft floor mats to soften the brick and provide a texture contrast. Overall, I love the room, it has character and strength, its not boring and mundane. Good luck! I hope you find something that suits both you and hubby