Perhaps consider your needs and how the rest of the room will function. There could be a bench seat with table for homework/games, just the bench seat (and storage) for resting/reading by the window or two comfy chairs for reading with an ottoman. What is the better use for your family.

It looks like a beautiful room. Bay windows are great for bringing in light and creating a room within a room kind of space. The windows are quite low to the floor, so detailing a window seat into the space has some challenges. You could mock-up a window seat to see how useful it is and how it impacts the space and usability. My guess is that you will be best off with flexibility and not building anything in.

What would you suggest as a mock-up....flexibity is nice...I just have not found chairs that would work nicely in the space without just looking out of place or silly. I want the space to be used...not a stuffy, formal living space.

Also wondering if the low windows and lack of depth will be an issue in making it a substantial place to lounge.

I think your instincts are spot on - the space is not spacious enough to practically be a lounging area.

I would select an assortment of pots and fill the space up with beautiful house plants.

Best.

I was possibly debating between two smaller swivel chairs or maybe a low table (built) with a cushion on top...flexible seating?

I like your idea of two smaller chairs -- though I would do comfy club chairs -- with maybe a tufted bench ottoman -- maybe square. (you could put a tray on top for when you want to use it as a table). It would be a space where people could lounge, hang out, put their feet up. And for lighting -- two pharmacy lamps. Good luck!

Here is a small suggestions from a project we did for a client. Notice the chairs and window seat? Though the window seat might not work, the look of this particular design gives you an idea of what it might look like.

Azalea Cottage - Living Room · More Info

A window seat is charming and can be functional if pull out drawers for storage make use of space but in your situation, do you feel the windows are too low?

Perhaps your idea of smaller scale swivel or club chairs on wheels is the most flexible option?