Should have mentioned that the room directly adjacent to this is an oddly configured living area. Would have loved to take down the whole counter top with the sink/dishwasher and put it in a more central island, but moving the plumbing is just too costly.

As Sophie said, you do not have room for an island. Not all kitchens work well with islands, and yours falls into that category.

i think folks need to read for comprehension.... OP knows ixnay on an island.... turning peninsula into island.... i think!

Can you provide measurements of that whole kitchen area as well as a picture or two showing the area behind the peninsula?

Thank you for all your input! I do not have an eye for this kind of thing, so it is so helpful to get others opinions on this. Yes, we are thinking of turning the peninsula into an island, but that would necessitate us taking down the bank of cabinets adjacent to the peninsula (the ones right next to the door).

Our initial plan had been to knock down the overhang cabinets and everything under it and create a big island that would have the dishwasher, sink, microwave, etc. But the cost is too high to relocate the appliances.

If we are stuck with the peninsula, do we have any other alternatives as far as getting rid of the large open space in the middle? Could we do something t-shaped?

I know our kitchen could be a lot worse, but I really dislike this setup and would never have agreed to purchase this house knowing we wouldn't be able to fix it. I hate the awkwardness of people gathering in the big empty space in the middle of the kitchen. First world problems, I know. I will take measurements of the kitchen space when I get home tonight. Photos are from the listing of house and previous owners stuff, we've since painted and have new furnishings.

Thinking.... I would remove the upper cabinets from over the sink. Remove the wall cabinets that are near the peninsula. Remove the bank of cabinets attached to the peninsula and also the cabinet that makes the peninsula an L. Then move the peninsula forward so the dead space in the center of kitchen is less. New countertops with an overhang on the sink countertop for sitting (same level as now not a higher one). That will also give you a larger dining area

I don't see "structurally unsound floating cabinets". Are you referring to the peninsula?
If you have a problem with people getting in the way when you are trying to cook, point them to the breakfast table to sit down or give them something to do which will help you.

"here, take out this trash, thanks!" i would do it in a heartbeat, i hate an audience when i cook, ha!

felizlady she means (i think!) the cabinets hanging from the ceiling over the peninsula.

The issue is you have two doorways and two walkways in your kitchen. Anything you put in that dead space in the middle is going to impede traffic paths. While having wasted space isn't great, without a complete gut and redo I'm not sure there's a good layout to use it that wouldn't create major congestion.

Where do those two doors lead? Not sure why people are confused in you kitten. They can just sit at the peninsula.

"The issue is you have two doorways and two walkways in your kitchen. Anything you put in that dead space in the middle is going to impede traffic paths. While having wasted space isn't great, without a complete gut and redo I'm not sure there's a good layout to use it that wouldn't create major congestion."

This is what I keep coming back to - there is just no way to reconfigure this without gutting the kitchen. Ugh.

The doors lead to the garage and the pantry. Since we have another back entry for us and a front door entry for guests its not a heavy traffic area, but we do use it during the winter when our cars are in the garage.

The cabinets over the sink were deemed structurally unsound when we had the house inspected prior to purchase. They are actually "bowing" now and it looks like it could give at any time. We don't keep anything in those cabinets for fear of weighing them down might expedite their fall. Just waiting to take them down when we do everything else.

If the cabinets are truly structurally unsound, then remove everything from inside the cabinets and take down the unsafe cabinets now. I'm coming from a safety POV.

Not every kitchen needs an island. In fact, I think an island is an impediment in many kitchens rather than a problem solver. An island is a marketing gimmick that has been perpetuated over the last X years by HGTV. I have shown many homes where the kitchen would be far better without the intrusive, isle blocking island. It makes good MLS copy but isn't always the right choice for function and flow.

Try thinking of the kitchen without an island and without the unsafe cabinetry. What can you do to improve your kitchen storage and flow without adding an island? A lot. You may need a KD to answer this question. Or post your dilemma without the island requirement. Post your dimensions and a sketch of the kitchen in its existing space so you can get some real help.

IMO asking for an island for your space is limiting your chance of getting good creative answers to your kitchen dilemma.