Painting built-ins is like painting cabinets. Expensive or very time consuming to do right. Be sure you’re ready to commit to that. The easiest approach is it only paint between the baseboards and chair rail. Maybe even a nice wallpaper. It will still look cohesive with the white trim. Add more masculine furniture and light fixtures.

My concern is that a dark color between the top trim and the baseboard will make the ceilings look/feel short.

I think you are right that just painting the wall below the picture rail will make the room look short. You can always start with the the wall below the picture rail, then reevaluate. Just be prepared to do the upper wall as well.

I have picture rails that are a bit higher on the wall than yours (6 inches above the door trim). With light colored wall, I've been happy to leave the wall above the same color on the ceiling (saves on cutting in). But when I painted my bedroom walls a dark color, I was unhappy with how it looked and ended up painting the wall above the picture rail as well.