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.

I would consider something light with some other colors to mix in like this. http://t.homedepot.com/p/Silestone-2-in-Quartz-Countertop-Sample-in-Mont-Blanc-SS-Q0220/203674451/ I like the wood paneling and would paint it a white with a warm feel to it. A white will reflect a lot of light from your large window. I wouldn't paint the window casing as it might tie in better with the rest of the house. Good luck!!

congrats! first, sand prime and paint out those cabinets....i'd go with a grayish shade of white or pale gray that will work with the flooring. i'd also carefuly chip off the yellow tiles. since on a budget, consider applying some beadboard as your backsplash, painted in a glossy, oil based or marine paint in a crisp white to keep it scrubbable, then, dress up the edges with some small mouldings, painted in the same white paint. this is going to be SO MUCH less costly than tile! and it will look great with the butcher block countertop. you can probably refresh the butcher block with a light sand and oiling. you could even get an additional piece of butcher block (ikea) and create a step-up 'bar' for some stools on the peninsula for some casual seating. then get a pair of pendant lights to hang from the pot lights above (they make lights that insert directly into the pot light...no hardwire necessary).

Bottom line, a toe kick is to stop you stubbing your toe and get your closer to your worktop counter. If you can fit your foot underneath it in shoes or barefoot while standing at a counter and not stub your toe or hurt your upper foot, you can do it. If you cannot, you will be forced to stand back further at your counter and that will not be comfortable for you in the long run.