The ventilation system is part of the clearance requirements to the wood framing around the fireplace. Blocking it would require greater clearances to those combustible material and therefore require a complete demo to achieve those clearances. Sheetrock and wood furring are both combustible materials and must be held back a considerable distance from the fireplace opening, so you will still have a lot of rock showing.

Thanks for the feedback/info! The more I read about these 70's era heatilator/ventilated fireplace systems, the more I think our best option will be a complete demo. :(

For reference, the surface of that large wooden shelf is ~6' off the ground, so we don't find it useful for placing any decorations/trinkets on, since people would basically need to climb up onto the bench to see anything up there.

I would like to keep a fireplace, but since we live in a fairly warm weather climate, it would mainly be decorative (I don't think we'll ever use it).

I feel like even if I remove all of the rock and rebuild a more modern looking mantle (something more similar to the attached image is what we'd be looking for), accommodating the large vents (making them invisible/attractive) would be impossible/difficult. I can't get over how large the vents are... 9" x 11" for the floor vents and 8" x 36" for the one above the fireplace. :O

They are that large to keep enough air going through them without the use of a fan (in case of power outage, the wood still keeps burning, unlike a modern gas fireplace with a safety shut off if the unit gets too hot). The air cools the outer layer of the whole assembly so that wood framing members can be placed relatively close to the unit. In effect, the added efficiency the vents were designed for also act as a heat shield.

Without knowing how the rest of your home is styled, it's hard to suggest for you..
However, if it was my place, I would leave the fireplace & rocks, but remove the horizontal shelf, as it is drawing the eye to the sides & making the area feel cramped. Instead, you could add some vertical beams, perhaps painted in a glossy colour or black, to reflect light. This should also distract the eye from the vents (which you could place plants or ornaments in front of when the fireplace is not in use. Also, definitely add some more lighting / lamps and I think that would be enough to open the area & make it seem like a more intentional feature.

If you wanted to demolish part of the rock wall, perhaps just leave a vertical strip in the centre that extends past the fireplace to the vents & not further. Again, this vertical shaping should create a visual illusion, opening the space upwards & drawing the eye away from the floor-level vents. Unfortunately, I don't know much about the logistics of such a job & I imagine careful demolition to leave part of the wall might be quite difficult. :/

As a temporary solution, you could try hanging white / off-white drapes from the ceiling (either side of the hearth, in front of the lava rock) to test out the 'verticalisation' theory too (:

Found this link, FYI too:
http://www.silive.com/homegarden/homeimprovement/index.ssf/2011/04/fireplace_facelift_is_not_a_jo.html

Other than the placement of the wood mantle being too high, what is it that you don't like?

Since there is no glass shield in front of the fireplace, it means it is pulling air from inside the home. This mean that whatever heat was generated by the fireplace will soon go up with the smoke. The vents is a air gap between the fireplace and the house framing. Since the fireplace is large and ugly, I would check how much it would cost to replace it with a modern gas fireplace. This way you would get a heat gain and the temperature would be lower than a wood fireplace making it safer. I just don't see saving something you don't like.

I wish I had the 70s house with the rock wall. In the 40s everyone took out the gingerbread from Victorian homes. It's a mistake.

we just took out a huge fireplace- it was worth it, but your situation is different. I would remove the rock, which is likely just cladding, and cover the whole wall with large format tile that complements your décor.

Hi! I actually like the rock. I would remove that wooden shelf and leave it. If you really do hate it, maybe it’s possible to reclad it in a more modern stone, as someone ^ suggested?

Although the fireplace may look dated now, that rock fireplace may one day be a cool retro feature and since it's original to the house may add historical value as well. Plus, as someone already mentioned, fireplaces are typically something that add value to the resale of a home. I would leave it BUT would remove the mantle and then build built-in bookshelves in front of the entire rock wall, thus hiding the fireplace. Yep! Build them right on top of the ledge, include a space for a nice large flat screen TV or nice piece of artwork and then tastefully stage the shelves with books and a décor piece here or there. Since the stone below the ledge will still have exposed rock, you could either frame and drywall it or just paint that small lower rock portion to match whatever color you paint the bookshelf. Then, come resale time, it can be mentioned that a fully functional stone fireplace exists behind the bookshelves, which would be easier to remove than an entire framed drywall façade if someone wanted to.