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

What about mosaic tile? Lots of colors, styles, sizes, and finishes to choose from. You can also mix tiles or keep it simple and uniform - whatever you prefer! This fireplace was done in a single color of iridescent tiles, very sleek and modern! (other colors available!)

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.

Well, for lack of a better idea, since you find it a drafty little space. I'm assuming the draft comes in on the right? Most of the necessities in the area are located of the left side; i.e. vent, thermostat, light switch etc. What I would do I think is caulk up the drafty spots, maybe even add sized poster board wrapped in batting I covered in a gorgeous fuscia with diagonal grosgrain ribbons every which way covered with a heavy velvet to be attached to the area above & below the window. (Of course remove the drapes that are hanging in there). This for the purpose of using it as a pin-it board for notes. Attach a table height board covered in felt to carry across the full width of the little room. Leaving just enough space for a comfortable little antique desk chair. Paint the back wall a bright cobalt blue, paint the ceiling a silvery pearlescent white. Find a way to attach a clip-on task lamp. And stretch a heavy duty enough wire across the top of the opening and complete it with a heavy doubled velvet drape with a drooping valance. Place a swag with fringe & jewels on it to be closed when not in use. Voila intrigue is yours!