Now it's beginning to work! Luv the rug! A few more red showstoppers, and I luv the post about matting your family pic, and larger frame for it. Looks like you might be a bit uncomfortable with the great post idea of moving your sofa out into the room away from wall. If so, could you accept putting it diagonally from the entrance doorway, across that corner where it is, stopping at the edge of your window? That's a bit of a move outward, still can see the fp and tv, and show off your new rug, which could go diagonally in front of the sofa. Then, if you like that, after a while you could move it on out as Deb K suggests. Sometimes intermediate steps are more doable for us than those big changes.Same with painting; if you could first paint just the fp wall, then later paint other walls...seems some color would really make it more homey. Would you cosider a quite contemporary fixture for the light in the center ceiling? Maybe a bit of red could go there!

I like David's comments above and think that you should select a simple large (12x24") tile for your fireplace, light or dark.

Greys would look good in these rooms. I wouldn't paint the paneling. Rather than a mirror over the fireplace a large scale painting would look good.

I would place the sofa facing the fireplace either with access to what's behind the draperies or not, and put the tv where the chair is--roughly. On the far end I'd arrange a small conversation/reading/activity area. IE:2 chairs, a table and a lamp or a small activity table with a hanging lamp. Of course, seeing the scale of your new furniture, once you receive it will help. I just hope you have selected comfortable furniture in a smaller scale than what you have.