You probably don't need to turn over the soil--probably shouldn't on a steep slope. Talk with your local experts about the best way to convert your paddock. Maybe there are enough native wildflowers growing in there that you could manage by not mowing. Here in the US Midwest we often solarize the soil by covering it with clear plastic sealed all around--this takes a full summer. I have also killed grass by covering it with a tarp for a whole year. For paths I have just laid newspaper, wetted it, and then covered it with mulch. So, it really depends on how big the area is that you are considering. Do find an expert on your area.

Check with your realtor about spending any money on an update. Tidy up the stuff in the corner, put the sofa next to the fireplace facing the view, angle the chair near it, and let the next people decide what to do with the space. Some people will love the wood, others won't, but don't try to guess. You could spend a small fortune on new flooring only to have it ripped out as people make the space their own.

A very simple layout keeping the floor space within the kitchen, the WIP takes up a lot of space with not much gain, The broom cupboard could be moved to the Laundry/entrance, narrow. If the wall has been bumped out to the eaves on the deck side giving an extra 300 depth to the kitchen you could make the island 2700 x 1200 and all drawers. The wall of narrow pantry will hold all pantry needs and more, no deep cupboards to dig into. cheers

I would go with the larger bedroom if you already have plenty of other toilets and are happy using those.