I would suggest you take out the cabinet that is to the right of the stove and use it elsewhere in the house -- perhaps in the bathroom or dining room with a hutch above it. Then, I would suggest you have someone install a lazy susan cabinet in the corner between the sink counter and the stove, meaning you would move the stove down a bit and have a small cabinet/counter top to the right of the stove. I would suggest you have the cabinets refinished in white and then paint the walls a pastel you like. If you would prefer white walls, then add white-painted crown molding and paint the ceiling a light neutral blue, such as Sherwin Williams Niagara Falls Blue. Then, I would suggest you choose a favorite accent color and use this sparingly in accessories like towels, pot holders, small vases or floral arrangements, and a valence above the triple windows. For a genuine 1940s look, you might have white ceramic square tiles with a rectangular red border installed as a back splash behind and above the stove. If you are replacing counter tops, I would suggest a light color such as white with a beige or light grey vein or striation for some sort of pattern. You might be able to find the same color and design in floor tile OR opt for a wood floor as another poster suggested.

Not yet - I am thinking I will get a length of aluminium angle and put that on, or else a piece of timer and then paint it with waterproof paint.

I found this photo online, perhaps it will help. In this picture the crown molding on the cabinets flow from the kitchen to the adjoining room. Maintaining continuity with the color and some of the trim detail will make the rooms transition nicely. Don't overlook the details like hardware finish, lighting and plumbing fixtures as these elements can also tie the two styles together. I hope this was helpful.

There is a lot of paste and size residue still on the walls. Washing and scraping helps but it still feels like it's there. Would a good sanding be sufficent or do I need to wash all the paste off before painting?