Not sure where you're located, but a gravel driveway may help to soften the house versus asphalt or concrete. Soften up the area with grasses. Here's a link to a photo of grasses with a hot color palette http://www.spacemakerpress.com/catalogue/catimages/st05imgb.jpg You can always choose a more muted color palette as well. I would definitely tier the plan heights so they're taller against the house and gradually get lower. It would help to bring the house to human scale and not appear towering above. The pathway could be in a natural stone - the same color as the gravel driveway (if you can do gravel).

You have done a beautiful job of tucking plants into the crevices of your retaining walls. Your house trim color is perfect -- just slightly lighter in hue than the retaining wall blocks. First I would paint the big, flat gray wall slightly lighter than the blocks and slightly darker than the house trim. The concrete walk and stairs I would stain a mottled blend of the blocks and the house trim colors. Next would be to paint the railing black or the house body color. Now, think of the following as creating a light, airy trellise structure from the walk-level face of the (currently gray) wall to about 7' above the top of the wall (using 6x6" posts attached to the wall) with a corresponding line of posts sunk into the terrace level 2' in from the outside edge of the wall-attached posts. The inside posts would be about 6-8" higher than the outside posts. Put 4x4" wood to attach the outside line of posts to each other and do the same with the inside line of posts. Run wood pieces at the top of the two lines of posts from the inside line to the outside line at about a 45 degree angle. They would be cantilevered up at the terrace level. Across the top of the angled pieces create your top trellise boards which run parallel to the two lines of posts. OK. There you have your basic structure. You might want to extend the structure around to follow the street side of the terrace. You could then follow the suggestion of reom10 above about creating a bench-planter on the terrace side. Your spacing of the boards parallel to the gray wall and attached to the outside posts would determine how private you wanted your terrace to be. You might want to soften the terrace "floor" by using something irregular like flagstone with groundcover plantings between the stones. From the latticework on top of your structure you could hang seasonal flower baskets. Plant vines to go up the trellis and spill down the wall. How about planting a row of tall, narrow shrubs along the neighbor's fence above your terrace to help add to your privacy and make your yard feel less 'structured'? Or, how about patio table/s with umbrellas to block your neighbor's view? Anyway, you have a fun project ahead of you.

We had a landscaper come in and draw a plan. Re-used the whole bricks into a grid pattern, and filled the squares with concrete. This summer's job is to build the bench seats around the outside for a seating area. The flat surface has been great for our children - they learned to ride their bikes out here, and love decorating it :-)

Moss. Preferably the thick dense dark green kind of moss that looks like a carpet that grows on the north side of embankments where little sun reaches. How close is your nearest state or national forest or, in the alternative, the nearest dirt road with an embankment that gets little if any sun because of shade trees. Take a drive and/or walk and see what kinds of moss you can find and take some pics. A dozen or so pieces would likely be all you need to get it started because, with the right conditions -- shade and moisture -- it spreads. (Ferns like shade but usually do better with drainage. Moss likes damp but will not grow in a puddle.) Where you have windows, you could create a "view" : With a concrete planter (or on concrete pavers set a large clay planter) with a trellis with English ivy. Alternately, you could buy your own pieces of exterior grade plywood and use deck screws to affix them to the fence posts and horizontal supports of the fence and decorate them w/paint and/or planters and/or metal sculpted art --- get creative.