"We plan to make a larger opening between kitchen and dining as well." Does anyone else see the red flag?

Seek a local person of talent to help (protect) you.

Yeah, that flag waves every time someone has been watching too much HGTV with idjuts swinging a sledgehammer at something that no one has properly inspected as to it being load bearing, or thought of the sociological consequences of all noise all the time.

I am actually a young architecture student (who watches no HGTV), who just bought a first home, and who works for a licensed builder who would do work properly. I have also verified that the wall is not load bearing...the joists run the other direction and a beam line picks up the joists along the fireplace wall. There is HVAC in the portion of the dividing wall adjacent to the fireplace which is why it was left extended. We are really just looking for a way to gain more storage/an island in the kitchen and go down to just ONE eating table in the dining room that we don't have to go through a little door through every time we want to eat cereal.

If you have alternate ideas that do not include removing the wall, let me know.

At the very least, you need some graph paper lines printed on clear plastic so you can put the upstairs atop the down stairs and have the visual you need to keep track of your fixed basics as you finalize your design to make sure your stairs and fireplace/chimney and weight bearing walls line up the way they need to be; better yet, I agree with Architect Mark Bischak -- you likely need some pro help ...

...because ... when you choose option 2, your stairs move where?

I see one short (left to right) wall (just above the rectangle with the word "dining") that you could move without creating a problem with the stairs. If you do that, as the building is being designed/built, consider accessing the lower base corner cabinet in the kitchen from the hallway across from the stairway.

Just a thought: Local building codes, space and budget permitting, of course, you might consider an addition to an outside wall, perhaps as an entry to the front or back of the home, in order to accommodate the stairs and possibly even the fireplace/chimney by having a small landing/hallway and then the stairs (w/French door at the bottom to control heat loss) begin on one side of the fireplace and form a -- " [ " -- wrapping around the chimney to reach the upstairs landing/hallway.

Go back to class. Learn from your professors. Do some hands on in the trench dirty work for your builder. Learn about real world remodeling costs vs. Fantasy design world ideas. Get more experience. Until that happens, live with the home the way it is.

This is your chosen field. This is what you want others to pay you to do. If you can't figure out how to do that for yourself, how do you ever expect to be able to do it for others?