Here is our most recent design of the space. Although it worked for the Holidays, we're looking for something a bit more permanent.

Like the buck on the wall!

Would you consider selling the two oversized chairs and replacing them with a couple of smaller ones? That would certainly open things up. Does your kitchen stay immaculate? If not, I don't advise taking down that wall. Consider having it wired for TV instead. Then put the sofa in the window, angle one chair in the niche by your closet bumpout and the other one just out a foot from the end of the half wall in the dining area. What is the piece behind the sofa in your last photo? You appear to have two cabinets, so the one that is widest might look nice under the TV, but keep this chart in mind.

Well I think it's fabulous. Brings the rustic lodge feel into the home. We don't hardly have room for anymore mounts of any kind. Nice archery buck you got there!

decoenthusiaste- I appreciate the advice and different outlook! Fortunately, our kitchen does stay very clean, and the space feels a bit constricted with that wall being up right now, so I do think it's going to have to go. One thought I did have though, was getting rid of all the couches and purchasing something modern that would fit three people. Nothing too oversized. Then, in the corner next to the fire place (by the window) a leather chair and lamp to serve as a "reading area." We were also thinking about adding bar stools to the peninsula, so have that serve as a congregation point. And / or, taking the niche caused by the closet, adding shiplap or reclaimed wood to its wall, and adding a floating table to act as a sitting area as well. I'm just not sure if that's the best use of its space, as it is relatively large.

Generally, three people won't sit on a sofa together, but will leave an empty space between two people. I don't get the impression this is a very large space. You have a dining area and are adding a bar seating area and then another table seating area. That sounds like an overload of tables and chairs/stools. Do your friends prefer sitting on stools or in comfortable chairs?

Correct, when I mentioned a couch that could fit three people, I meant a three cushion couch - knowing that only two would probably use it at a time. The space isn't very large, but if opened up, I believe it could be god area. I'd say most of my friends are the standing and socializing type, and we're big entertainers. I agree with you that that my plan above may be a bit much. I'm just trying to brainstorm ideas for layouts and renovations that will make this a more welcome and open "gather around" spot. We also love to cook, if that makes a difference.

If cooking and eating are your main ways of entertaining friends, then think about removing the half wall as well to open it all up. Once the peninsula is done and bar stools are in place, you'll figure out what else you need for seating.