The baseboard heaters throw it off for me. We don't tend to have those in the Southeast US... at least I haven't seen any. I'm assuming you don't want short curtains or vertical blinds. Do you think custom made roman shades could work? You'd probably have to have more than one for the larger windows. Possibly have a simple valance they could hide under during the day...

Looks like there is some kind of mini blind attached to the windows. Will you be using those for privacy? I guess my next question is do you have to keep the curtains above the baseboard heaters?

Personally, I would paint the paneling.

What are you trying to accomplish with curtains? Do you need them for light control and/or privacy, or just to decorate the room?

Focusing on just decorative, I would consider replacing the current rods with decorative rods in a brown color and extending them several inches beyond where the current ones stop. Then I would hang light-colored, textured pinch-pleated drapes that end precisely at the bottom of the frames.

I also have baseboard heaters and find it very difficult to work window treatments around them. As a safety measure, window treatments shouldn't cover the heaters due to the hazard of fire. I have roller blinds on my bay window in the LR with lace valances, not very fashionable, would like to change them. My Dr also has a roller blind with a floral valance. I have been struggling for years with these windows! Ideas: you could use just a type of blinds or shades, i.e. cellular, wood, mini blinds, vinyl. Toppers work as in valances or swags. I guess I haven't been much help, but I know how frustrating it is with baseboard heaters. Good Luck!!

Thank you for responding. Daughter is moving into this house shortly with her two little ones. There is a basement apt. which will take all the improvement money to start, as we need to get that rented to make it affordable for her. Dealing with the extensive panelling would be in the future.
She had the idea she wanted sheers on the windows but she didn't realize you can't go right over the heaters. Those darn baseboards here in Alaska! If they were not there, I can see long flowing panels. They won't really need to be closed, except maybe the side window as the house sits up high with an empty lot on the view side and she will prob leave that area open.
Here is looking out over the winter garden

I have baseboard heaters in most of my house and have never put up any kind of window coverings because of it. (And I don't really need the privacy). But sometimes even here in the Pacific NW, there is a lot of cold air coming through the window glass. I think in Alaska, it would be even worse. I think I'd do insulated fabric Roman shades that would warm everything up at night when closed and cut down on drafts. Like these (I'm not recommending this company, just posting examples).

Here is a link that might be useful: thermal roman shades

That is a good point olychick. (Olympia I presume?) I found a picture on that site with large windows that had the Levolors you can move from either top or bottom. That might be good for privacy, but to still let light in.
Thanks