yes, I think it should continue around the mirror at the same width (or as close as you can) to bottom and right side.

Looks unfinished as is. I LOVE the colour of the tile!

I LOVE wallpaper. I would finish the tile, then find a paper to pull the room colours together as you originally planned. It will make that entire wall look like a "feature" wall. If you leave it, move the picture behind the toilet down - level with the top of the light fixture.

I would tile the entire wall from ceiling to base board. This will make a statement. The wall looks unfinished now.