Thanks Donna - This is very similar to what we used to have; basically, a mantel made of crown molding. :)

Would you consider extending the niche floor out and wrap it around the fireplace as the picture above for the mantel, or just keep the niche as it is and do a second mantel, where the old one was?

Thinking about this myself, the idea of having two mantels might be kind of cool. Both could wrap just like the picture you supplied, with the niche mantel only extended enough for the wrap around and the second, lower mantel extended out a bit more and wrapping around.

Actually, the original design looks great. The proportions and style are just about perfect, and would look even better if the brick/stone surrounding the hearth was painted in a contrasting color (light grey or cream) to the stucco portion.

Looks like a little repair is needed - what is that white stuff? Adhesive, or plaster? Whatever, it could be painted out to match the rest... The new insert looks great, just like it was there all the time.

Clearly the mantel you had to remove was added by a previous owner who just "had to have one" - but the small, original niche mantel above looks like it belongs there, and is in keeping with the original style of the house. I just think anything like a Colonial-cased, built up mantel will look out-of-place and superfluous. Houses from the period of yours often combined simplified Tudor and Craftsman-style elements (which are often visually compatible) and this fireplace is a great example. The result was something that looked slightly rustic, solid and tasteful. I like those light fixtures too-which also look original, and the floor in front of the fireplace, with the wood border is very nice - is that red tile?

Do what makes you happy - but in this case, I think the original designer/architect knew what they were doing.