Just quick idea to place tub area into bedroom [leave window, toilet and sink].

Some bedrooms have bed in 'alcove' [called?] could place wall lamps above the bed.

I get what you're trying to do and there might be a compromise. Here are my suggestions:
1. The remodeled bathroom looks cramped. With a bedroom on each side, you will need ample bathroom space.
2. A Private toilet area (separated by door) is really useful, esp if this is a family house, not to mention resale
3. A double sink! Would there ever be two people sharing this bathroom?
4. I hate the thought of losing the window. I'd be inclined to leave it and enclose the area where the toilet is now. If you have to lose it, have a skylight or solar tube installed. Bathrooms with showers...need a window.

A 6'x6' bath (more or less) is just about the size of a decent powder room and the closets are the only 4" deeper than the current linen closet. I would hate to sacrifice a bigger bathroom for two pretty useless looking closets. Maybe we should work on adding storage to the bedrooms first, so you can have a real bathroom.

@ Lampert Dias Architects - here is a drawing with the approximate fixtures as they currently are

This bathroom will hopefully in the future will be for several children...

The bathroom layout that you have is OK. I would just add a screen wall next to the toilet for a little privacy. I wouldn't spend a lot of money to re-arrange closets.....

Yeah, I don't think you're getting enough back to be worth the huge upheaval (not to mention, the dreaded Moving The Waste Line! $$$). You are being led astray by your square footage measurements -- what matters in closets is linear feet (since the difference between 27" and 38" of depth is almost meaningless in practice) -- so you're adding nothing to the lower bedroom and removing a third of what the upper bedroom had! If closets are really an issue, I guess you could compress the bath into a stall shower and widen the one on the lower-left. But kids sometimes just get small closets and have to have more stuff in dressers! I think the tub is more valuable in that circumstance.

Don't look at all the space in the middle as Wasted Square Footage, but think of it as Chaos Management -- rugs and towels and bath toys and maybe a wall cabinet for extra stuff, and....

Just my two cents.

Nice of Lampert making me able to sketch an idea. My layout is very kid friendly with room to grow.

@ livinginsb but haven't you just eliminated any closet at all for BR2??

I totally agree with ACM. Once you get kids in there, all bets are off about a smaller bathroom.

BR2 closet gone. I wasn't clear on which bedroom had ample closet space.

thank you everyone. I guess i am inclined from the comments to leave mostly as is.

just to clarify,the motivation for changing the br1 closet was to make br1 itself bigger. Also to further clarify, im a DIYer from a contractor family ( getting lots of help from the actual contractors in the family) and the bathroom is already demolished minus the walls. we are redoing pretty much all of the plumbing in the house anyway due to extremely poor work by previous owner... so moving waste lines is not adding much to the workload.