Right off the bat, John and I decided that we wanted to change the original fireplace to a gas fireplace. An unexpected bonus (in my opinion) was that we could remove the chimney! It's not the chimney itself that bothers me, it's those two funny bumps on top... (see a better picture of the offensive bumps here)
We will most likely put a flatscreen TV above the fireplace. There will also be a concrete bench that runs underneath the fireplace for additional seating. It will look very much like the photo below.
Our new gas fireplace will be more than an aesthetic feature. It will also serve as the only heat source in the entire house. Therefore, we have made sure that it includes a blower. We're thinking --hoping actually-- that along with sufficient insulation, it will be enough. Afterall, we're on the central coast of California... it doesn't get that cold around here.