We bought a 30+ year old home in poor condition and are doing a whole house remodel, We are stumped on how to treat this fireplace. It sits in a 20X25 great room which will be the hub of the home. The wall to the right will probably house the big screen TV with a sectional sofa facing it. You can see the old footprint in the photos. We would appreciate suggestions on what to do here.

Here's a very rough sketch of the floor plan. The original architect must have thought it made sense originally but it is a really weird layout. In answer to some of the comments...it is a gas FP and vents thru the roof-no chimney- but it would impact the bedrooms behind it if we took it out...so it must remain. Our original thought was to just picture frame it with a nice metal box and just repair all the wallboard. Maybe add a wood mantle. If tiling makes more sense, just the front wall? the original footprint? or????