I have seen them done two different ways . The panel hung above the hieght of the window and the panels hung at 3/4 hieght of the window so the upper part shows threw when the window is closed. The panels are always hung to the side of the window so only the edge of the window is blocked when they are open.

If you plan to dress your windows with drapes, you may consider curved curtain rods that follow the line of the arch. For more information and ideas about arched window treatment visit:

http://www.window-blinds-project.com/arched-window-treatment.html
http://www.window-blinds-project.com/curved-curtain-rods.html

Here is a link that might be useful: Window Blinds Project

Those windows are crying out for custom treatments!!! I love eyebrow arched windows and you can do fantastic coverings on them. But alot of those would require a professional. Are you planning on doing custom?

If not - my suggestion would be to do stationary panels either hanging 1 rod across the very top above the arch, or 2 rods - one on each side above the window.

I personally don't like hanging rods between the transom and the lower window. I think that cuts the window in half and shortens the ceiling height. Your windows look pretty tall and I'm not sure you'll find ready mades those lengths.

If you can swing custom treatments - these would be the rooms to do them. It would make a bold statement.

Here are a few ideas that I would suggest if I treated them:
Hang point to point swags on medallions following the shape of the arch and stationary side panels tied back on the outsides. Or hang slouch panels from medallions and follow the arch. It would look really nice to accentuate the arch!

I was going to suggestion medallions too. They come out beautiful. Not something I would try to put together unless I was a professional seamstress.

I have arched windows too and I have also been agonizing over how to treat them. I have collected dozens of images of various treatments. Here are a few:
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