Remove it all. Have an electrician come in and Create recessed lighting for the room. It needs multiple source of light. The gray clashes with the brown of the TV console. You need a cohesive color palette plan, as well as an overall design plan.

The large mirror over the sofa doesn't feel right. Just go down three shades for the wall color between the chair rail and crown molding.

gray is not always the answer! I hate to say this. paint the room a warm beige tone and remove the railing. if you keep the railing go one shade lighter on the top. the tv stand conflicts with the wall pattern. needs to be much simpler. and make that wall a feature wall.

paint the raised tone on tone one shade darker, wall mount the tv centered. and get a long low console so that the right side can have some deor. and the left side has the tv above.

Is it the moulding or the paint color that you don't like? An easier way is just to paint the darn thing! Decide where you want a different color and either paint above the chair rail, below, or both! You can go with a color several shades lighter. It will add visual interest either way. That color is pretty - it looks like a teal-gray in the picture. How about some large art pieces on the walls? If you keep it light and simple, it won't look busy. Lastly, please put a sconce or lamp in each corner and on a dimmer to maximize lighting options.

Using the same molding as on the tv wall would ultimately look the best. Whether you do this or keep the current molding, consider what they did in photos below. The molding on the three walls is painted the color of the accent wall. It ties it all together.

http://houzz.com/photos/3237181

Here is the accent wall

http://houzz.com/photos/18459217

I do not think that the mouldings look busy but rather too many colors. I agree that the whole room should be painted a nice tan/beige/khaki color. I would remove the brown shades and go with a pretty fabric treatment.

I would probably lose the chair rail, because it is cutting the room (which already doesn't have very high ceilings) in half vertically. But you might also consider painting the crown molding and chair rail the same color as the walls, so they provide relief without drawing too much attention to themselves. On the subject of color, the panel led wall and the plaster walls are definitely too close to each other in a not quite coordinating way. A warm gray or similar neutral would be a great choice.

HI -- Yes , that chair rail and the two colors has to go . One color for the walls would be better . Actually what would look really great for this room is to get rid of the crown molding trim and baseboards (take it all off) and continue the paneled grid pattern for the whole room ... then paint it all including the window frames just the one color . This will make it look more high end .

Get rid of all of the tacked on add ons and prime everything. That will give you a neutral start to build the room around and it will be ready for whatever wall color gets chosen.

I love the TV accent wall, but nothing else matches it. This is a tough one because you need to make the large brown couch match that gray wall. It will be much easier to repaint they grey wall to a creamy light or medium beige. Remove the chair molding as it cuts the rooms visual height. Paint the other walls an off white and paint the crown & floor molding the same beige color as the TV wall to tie them in. Paint the TV stand white so it pops in front of the wall. Remove the floor lamps and add table lamps that compliment the beige & white colors. Instead of the wide mirror replace it with a set of mirrors. A light cream & white throw on the couch and some nice fabric window treatments can finish the room off.

Thanks everyone for your replies. You've all confirmed what I was feeling about the room. I woke up this morning and removed the chair rail and accent moulding on TV wall. My mudroom, which is right off of our family room (you can see a sliver of it in one of the pics) is painted in Revere Pewter. I'm thinking about painting the family room the same color, and keeping the crown moulding white. Going to lose the awful mirror above couch and perhaps paint the TV console distressed black? Any suggestions on different seating arrangement? Thinking about getting rid of sectional and going with long couch and chair. We are a family of 5 and spend most of our time in this room so it needs to accommodate us.