A picture would help...

I put mine above the transom.

hope this helps, I did google some pics and found my fav was the half rods with the non stationary drapes. I dont need drapes for privacy just want to add texture.

My experience is most people go over them to add height and block out the sun. But I have installed many below leaving transom open. After about a year or two,I am back at a good percentage of those people homes switching to a new treatment to cover them to block out the sun.

Here is a link that might be useful: Panel Track With Transom Open

I hung my drapes below the transom in DH's study...it's a north facing room so sunlight isn't an issue.

Like Annie, I put the treatment (not drapes, though) below the transom:

If we decide to put window treatments in our adjacent dining area, we'll also leave the transom exposed there, as not much direct light comes in through that top window, and privacy isn't an issue.

Maggie, in your case I would definitely go above your transom. You have high ceilings and it will look best in your room. Try using A rod 2 ft wider than your window and stack the drapes back on the walls a good bit, making the window appear wider.

I would do it like Annie's, unless you get direct sun that bothers you.

Part of the beauty of transoms is to leave them bare with curtains used below them. I have a thing for curtains under transoms. lol