Newly acquired property.

I am doing a gut reno of the kitchen behind the walls illustrated in the photos. I want to open it up to the main living space.

The kitchen opens to a dining area. The photo is taken from an elevated living area that is up 4 steps.

The kitchen is super dark and claustrophobic and feels disconnected. It has a vaulted ceiling with the same slope as dining area. It is offset from the dining area, and is deeper than the dining area

Dilemma:

1) remove the walls completely and use a kitchen peninsula to separate it from the dining area

2) leave the soaring walls, but add "cut outs" as indicated by the crude blue markup

I am leaning toward option 2 for it's architectural interest

Thoughts?