If you are not too attached to the mantle, I would remove that and resurface the wall up to the ceiling and add a reclaimed wood mantle. There are stone veneers that would be thin enough where you wouldn't have to take off the tile, then just add extra mortar behind the veneer to bulk out the tile on the wall so everything is flush. It would look awesome to do all three sides of the fireplace bump out. Here is a picture of the look I'm talking about.

Shelter Island Beach House · More Info

I like smaller travertine a little better, like this:

Bettendorf, Iowa - Jennifer Home (by Windmiller Design) · More Info

Good luck and happy decorating!!

I think the mantel is way to high for the ceiling height.

I would loose the hearth and if you could move the fire box down I think it would give you a better look.