I would do a glass splash back [ this can be painted in your color choice to suit the decor ] - taking from the bench top up to the bottom of the range-hood on the wall of the stove. The window is beautiful and I would give anything to have them in my kitchen. I would probably paint OR stain and apply marine grade vanish to the would so that any moisture would not be able to ruin the wood. I would also put herbs or flowers there. Could it be made into a servery for outside maybe ???

Nothing will affect the feel of your house as much as the quality of the light. If you can at all swing it, keep your divided lights. Looking at your photo, those windows are gorgeous. Can you place glass on the exterior? I have some lead light windows in 2 locations. I made new frames with the leaded old glass on the inside and plain glass on the outside. While not as weather-tight, it's much better than single glass. While not as neat as your present windows, the new windows that have the interior and exterior lights with the spacers between the glass also look great and are at the present standards for energy efficient. We live in the PNW and used Milgard; less expensive than Anderson and Marvin, but so far I'm very happy with them.

I would clean up first. Especially the stuff growing in the paving. Then get gardening with pot plants and start experimenting with different plants and the positions. See what you like and if you can keep it alive! Our house has the sun setting over the back fence and we've done a few inexpensive things to reduce that issue (most expensive were outdoor blinds around the verandah) but for most of the year we just don't want to be out there. It is hard work to keep the plants going in summer, there is a lot of sand due to the difficulty in keeping lawn alive and it is just bloody hot. So, that's why I'm saying clean up, start gardening small and see how you go before committing to structures that might not address the real issues you have with the yard. Just my 2 cents! :)

I'm glad you guys are growing.