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 ???

Depending on you budget, I'd replace the counter tops and flooring. I agree with removing the dark valances. Replace the top corner cabinets with 42" cabinets or remove entirely. The ones there are too small for the space. An island, not that you need the counter space would cozy up the area. Also replace the front on the dishwasher with stainless steel to match other appliances. Your layout is good, no changes there! If you decide on an island, you could include stools there and remove the current peninsula, this would open the area to what ever room is adjoining the space. Good luck and have fun. It is a really nice space.

This made me laugh: http://www.theguardian.com/environment/2016/jun/09/seagull-turns-orange-after-falling-into-vat-of-chicken-tikka-masala I couldn't copy the picture, but it's hilarious.

Having been brought up in a Lockwood home I can appreciate your love of the wood. I notice you have a light green bench and that would blend nicely with some similar colours in the room. I would consider having your cupboard doors replaced or sprayed to compliment the bench or visa versa you can have your bench updated with a new finish to modernise it. Perhaps you could just price out the cost of a new bench and leave the rest of the kitchen as it is. The odd bit around the dishwasher looks weird and that might be able to be fixed by curving a new bench into a small breakfast bar type set up. If there is room I would also reposition the microwave to the right of the cook top and use the existing space for a display or a lovely pot plant.