Had same window-ceiling design. Tried both mounted high on wall and level with top of window frame - then out to side wall (equivalent to width of one window). I was surprised, the mounted level with top of window frame looked better than higher on th wall. Please post what you end up with.

I would hang 6-8" above the window molding. As far as the width, it depends on how wide your panels are so you can determine stack back when open. You'll need more than just a single width on each side.

Or you could hang the rod wider than the window so when stacked back, it just skims the edge of the window, and put the rod at the mullion so the small rectangular windows at the top remain unobscured.

If I were to do the whole window, I'd hang the rod above the existing woodwork by a few inches.

This is how I ended up doing it.