Is that a rolled blind on the window? Do you need to let it down at night? I think it would be kind of neat to get something like a curved shower rod, and mount it at the halfway point, if you're moving the table. It wouldn't interfere with the blind, or with light from the top half of the window, and pots wouldn't be banging against the glass. Overstock has double curved rods in three finishes. You might need to provide some kind of support--maybe chains suspended from the ceiling?

Curved rods

Does the stepped wall serve any purpose? If not, are you willing to take it out if you can match the flooring? It would not be a difficult change even if there are electrical lines: it would visually open up the rooms.

Mama Goose - Oh I like the idea of a curved rod! Theyr'e just standard white blinds. We might get the thicker wooden ones for all our windows in the near future. I like to leave that window open, my fiancee likes to close all the windows, haha.

Rantontoo - Hm never thought about it. It has a built in speaker system outlet and electrical outlet. Defiantly something to think about. I like open.

Hmm maybe a shelf with a rod? Though the window's pretty wide and it would be difficult to do a support in the center, as you said maybe a chain out of the ceiling.

http://st.houzz.com/simgs/0491a2d60202777a_4-3372/traditional-display-and-wall-shelves.jpg

If you hang plants and pots in the window, do you really need a window-covering? It seems like they should provide enough privacy. I love open plans but I also really dig that stepped wall. I think if I were to remove it, I'd just remove the lowest, outside step first to see if that is enough openness.

Hang 3 nice pendant lights over the angled counter?

I found this pic on a blog--one of many if you scroll down in this link.

Considering the height of your windows, you could have two tiers.

funkycamper is right--who needs curtains when you have pots?!

Had to add this one:

maybe u can retrofit some of the base cabinets with pull-outs and put ur pots in there. me personally, i don't like the idea of hanging pots. it looks cluttery and they will get dusty and cobwebby, unless u use every single one every day. i wouldn't want to clean a pot/pan before i use it all the time. and if u have pets, they will have hair in/on them.
as far as paint, u either have to go light or dark, anything in between will blend with your cabs. greige is a popular color now. BM revere pewter is a great greige, BM kingsport gray, BM davenport tan or an earthy green BM wethersfield moss, BM tate olive. if blue is your color, how about BM palatial skies, BM san francisco bay or a blue/green, BM 712, BM719 BM760, BM 775, BM772 it seems like your kitchen gets lots of light, so a darker color could work there, even if u do just one wall. then just feed off of that color for the FR. get some samples and see what u like. the color will change with the time of day, night with your lighting and rainy days.

Good Luck!!

We had a pot rack over a butcher block work table in our previous home. Pots rarely used needed a quick, easy wash before using. No big deal. The frequently used ones were fine even though we had a dog and a few cats.

I have a pot rack over the stove (actually, had - took it down yesterday lol) and a dog who sheds like it's his full time job and dirt and dog hair wasn't a problem.