Either material can be made to look and feel beautiful, but the photos show the worst of both. I love baltic birch plywood with exposed edges, but it must be sanded smooth and clear-coated with a satin finish lacquer or urethane. Concrete (my passion and my business) can be tinted to give it a warmer shade, and either cast against a super-smooth surface or polished to make it smooth. Bedroom walls need to look and be touchable. The ones in the photos give me the shivers.

You may use a specific light in the grey on the wall were there are two windows. While the other wall with a long slim window has a wall feature design. There are numerous features to use, with the intension that it would be on the same colour contrast. As was mentioned that the blinds would be great sprayed though in a colour that will go with the walls colour and design. Need to be a balance in the colours for both walls and the blinds. You may use one wall with wallpaper feature if you prefer. I have found a site that may assist you with the design of your choice. http://colorhunter.com/; http://www.resene.com.au/wallpaper/#

We have used Dulux White Beach Quarter on the walls around our house with white on the ceiling and cornicing and absolutely love the colour... it throws a warm sand looking colour during the day and at night, seems to have a little grey tinge to it but I think that would match your existing colour tones beautifully.

I wouldn't. If having a master suite were important to me I would buy a modern home that has one. The thing about historic homes is that they typically had three equal sized bedrooms. It's part of the character of the home. If you combine two squareish bedrooms you will end up with a strangely shaped rectangular room that's not really all that useful. Particularly as you mention they both have french doors that go to a verandah. Those doors pretty much limits what you can do with the rooms. You will be trying to either preserve the symmetry of the doors or build a wardrobe wall up close to one and have the whole look of the room thrown off. A heritage home is what it is. It's never going to be a modern home and it's limitations are what people expect when they buy one. The limitation is a traditional floorplan that doesn't necessarily reflect modern lifestyle choices. One conversion that is often done on federations is part of the verandah is built in, and turned into a WIR or ensuite. Many of these homes already have built-in verandah sections so doing so won't necessarily ruin the character. Particularly if you infill them with a nice casement windows and appropriate trims on the outside.