Make sure you have a great exhaust system that actually vents to the outside, but honestly I think you will have mould growth anyway. If its not on the walls and grout it will be in the the vent itself. Is there anyway the bathroom can have some natural ventilation?

Sounds like it needs be reported then. Can (or did) the top sash be pulled downward? Or is that painted shut also?

I actually like the view from the window. To admire other building's is really nice, see other people walking the street, etc.. A great view doesn't need to be clear open space's or the Harbour Bridge, etc.. I like building's so it would be great to have a chair there and look across the roof tops. To see it all through a wonderful set of casement window's is really special. I would probably have shutters rather than curtains. Thick bladed venetian blinds perhaps. Just in white would be fantastic. I like the look from inside and out that shutters and/or venations give. Have to be the chunky timber ones though not the thin bladed ones! I'm not a curtain person so it would take a while for me to end up loving them but I can see where the others are coming from.

My house has these and they are great for breezes. I certainly wouldn't remove them. In one room I have double roller blinds, sheer with blockout. In the other room I have single block out roller blinds - over the top I have a floor length sheer curtain on the bigger window, then both windows have matching shorter valances. Hope this helps. BTW where I live in a sub tropical climate these windows are very popular.