Couple of pics would help. As for " keep the smaller window, frost it and have the builder remove the inside trim then completely drywall over the window keeping the look of the window outside but losing it inside? Will it look half ass and dickie?" Yes.

I wouldn't drywall over the window. Take a look at the options for recycled brick, they may match better than you think.

My ex-husband and I had an issue with a large window that looked out over a sidewalk where people were constantly walking by and looking directly into our living room. We solved the problem by using window film that was one-way so we could see out but it was like a mirror if anyone tried to look in. There are other varieties as well. We still got all the sunshine and light but didn't need to worry about whether or not the neighbors could see me watching tv in my nightie on a sick day...It also meant the door to door salesmen couldn't look in and see that I was home when I didn't answer the door. http://www.gilafilms.com/en/privacy-window-film.aspx#.VOuUBS5vksQ

Hi V Lyon. I'm a novice at this myself so I don't have any real comments except that what you're looking at doing seems nice. But I did want to ask is what program you used to do your proposed makeover? Was it just Photoshop? Or something else? I'm keen to try this on our 1970s house to get a feel for how it might look...