What about the room is no longer functional to you? I like fireplaces anyplace you can add them. They usually add a nice atmosphere even if you aren't right in front of them.

We lose a corner/chair as the walking "path" now cuts further into the room. I'm having a hard time visualizing chair/sofa placement. Thanks.

Without knowing what style you are wanting, I would say shop around for smaller pieces of furniture. A lot of what is on the market today tends to be supersized, but if you keep looking long enough, perhaps you can find some pieces that will work. One option might be a modular seating system where you had multiple pieces you could group together in different ways and change up as the need arose.