In an English tudor there are always (or mostly always) built-ins of some kind. I wouldn't change it too much to make it more modern. After all, you were drawn to the style, right?

Perhaps the problem you are facing with the built in shelving is the color. You could extend the built in to fill the wall, paint it white (so it blends), and use it to display something interesting. Be careful that it doesn't become a catch-all!

i'm echoing nancy.... its good to identify what made you walk into a house and say "this is it". maybe it wasnt the arched pass through... or the cabinet.... but when you vanilla-ize too many things in the name of updating (when they arent out of date...) you risk ending up with nothing but bland square footage.

Why remove the items in the home that give it character and suit the home's architectural style?

I also don't quite understand wanting to remove the built in. Was it really done in the 90s? Personally, I think the room would balance nicely if the top molding blended in style with the other woodwork.

Once you fill the arch, you may change your mind. If you add a large piece of art next to it, added LED stick-on lights inside and decorated nicely, it could be lovely. Perhaps consider another wall for your sound equipment. As well, a larger piece in that location may be a nuisance with the door right there.

thinking about keeping the built in. after filling in arch centering built in on wall with maybe some book shelves flanking cabinet or working in a flat screen tv

Ed, I don't know if you realize it or not, but "moving" a built-in is a big deal. It's not like you can just slide it over...