seeing the dining room behind the pillars would be helpful. try to take the whole room. one side is hard for helping. take down the chair rail, paint the cabinets white or light gray. remove the whole pillar wall. its not needed. add and island. add 6 recessed cans, and then pendants over the island. you could also close in the pony wall to add more cabinet and counter space......the other thing here, is you need a budget. or is this just a diy fresh up? if so a portable island could work.

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Here are 2 shots of the dining room. I plan on redoing all wallpaper removal and painting myself, but would hire out any other work needing to be done. This is a project we plan to tackle in the next 1-2 years. No specific budget in mind but not more than 2-3,000 as we plan to eventually move but would like to make this more appealing for ourselves and future buyers.

here are a few videos that might give you some ideas:

you can get rid of the railing your self for now, as far as just cutting them out.

Remove wallpaper and border

Remove chair rail

Replace light fixture on fan to a single globe

You could paint the cabinets but you have other trim that matches so don't know if you're interested in that much work.

If you want new counters but aren't willing to pay for granite or solid surface then look at some of the new Formicas--see below--they've made big improvements.

Since you get a big view of your kitchen from the dining room consider painting it the same color or a shade darker.

If you take out that half wall, you're going to have to try to match the wood trim, and it could be a challenge. I would take the railing out, but leave the rest. You could maybe have it raised up with some built-in shelves, and a wood top to match.

As far a colors go, greens and blues work very well with medium tone woods as it gives a nice contrast. I especially love the grayish greens and blues with it.

this year we just bought a 1968 Cape Cod in Kansas that is original that needs updating on our tight budget. I would change out the pulls on the cabinets. This toned down our paneling cabinets. I would use a cream type color for your walls. I think a darker color might work against you with your cabinets. Have you thought of making the pony wall a small breakfast eating area with a narrow counter? You could also use that counter as a serving area or food passing area. We had spindles on the ends of our kitchen counters that really changed the appearance just by removing them! I would put your money in new counter tops of even if you do formicia. That would really make a huge difference!!