So it depends on how much of a blackout you want. If you are OK with a light light from between the panel and the window, I'd use white (custom if you can afford it) pull down shades in a roller format. It takes up the least amount of space and only take an inch and a half of view away when it's up.

Otherwise, without covering some trim the only other way is to cut into your ceiling or use a French return rod. Though technicslly, either way you would use a French return curtain rod. Cutting into the ceiling just makes the rod "disappear."

But I digress. The French return is a rod that returns to the wall do that the curtain can be flush to the wall. With good blackout panels you are good.

The rod should be above and wider than the window. This way when the panels are open, the ends your graze the window area so you don't loose the view.

I will research that French Return Rod. I have not heard of it. I like the roller idea too because the trim is nice and I hate to block the views. I even considered white two inch slats because they can be lifted all the way up. I think the trim carpenter who did the trim could maybe add something to hid it when it was totally raised up.

What about some black out roman shades. You can inside mount them (if your windows allow) and pull them all the way up during the day.

French return rods

https://www.potterybarn.com/products/cast-iron-room-darkening-rod/?catalogId=84&sku=9302251&cm_ven=PLA&cm_cat=Google&cm_pla=Windows%20%3E%20All%20Curtain%20Hardware&cm_ite=9302251&gclid=EAIaIQobChMIg7iirc_67gIVlJJbCh1wAwkcEAQYASABEgLe9fD_BwE

I would use blackout cellular shades for privacy. They stack up to maybe 2” and are unobtrusive. You can then add any panels that you’d like. You mentioned possibly using 2” blinds and raising them during the day. I would not consider them for two reasons.

1. When you pull them up, they rarely stay lined up and are heavy - lots of wear and tear on the cording.

2. The stack will be closer to 3” and look heavy. We have them and I am considering a change to the cellular shades.

ETA: The 2” wood blinds stack to 7”. I just measured ours.

We have Roman shades ( flat) that have a blackout lining for our guest bedrooms at our home in the desert. Works great, blocking out the very intense morning sunrise ( bedroom windows face east ). Nice fabric, no need to hide top of shade when up.

What about asking the neighbor to turn off those lights facing your home at night.

I did that in a roundabout way, "Wow, y'all must have blackout shades or something. I don't know how you sleep with those bright lights." He just looked at me and didn't respond. I think I will try again when we get to know them a little better.

We are having blackout Roman shades made for the upstairs front room. When the seamstress finishes them, I will see how they do and possibly have her makes some for these windows. She did an outside mount to prevent the light gaps, but I think i'd want an inside mount on these windows. I think a cellular or roller shade that stacks and sort of "goes away" might be my favorite option because I don't want the room to become too heavy with fabric etc. Thank you all for your advice. If you have any pictures of your window treatments that you could share, I'd love that.

This is the room that will have outside mount white Roman shades with a navy blue grosgrain ribbon detail.

I think I need a rug in there.

After two years of looking for the right shades for our home I had an A-HA moment this past week - get the windows tinted. We will be getting our windows tinted with a 3M product that gets us where we want to be in terms of UV protection, day & night privacy and allow us to retain our sound & mountain view. Added bonus is tinting will help keep the warmth in winter and coolness in summer. We have three fairly large South and West facing windows that we have scheduled to tint soon and then I'll finally order some natural woven top down/bottom up roman shades! Tinting takes care of another problem I was having when it came to finding the right shades for my home - the need to have a liner. I won't need one now as the woven shades will hang nicely without one and tinting offers the UV & privacy. On another liner note, it would be great if window treatment companies offered liners in something other than plain white for the street view / exterior view color. I found only one place that offered something different - they had the option of an oatmeal, natural, tan or ivory color - any of those would have been best for me as I have a white house w/ white trim and having white showing window shades would have been too much of a good thing. Also, pure white tends to show any wrinkle, water or dirt spots more than other shade color. Just take a look at the backside of your window treatments - up close inside and from your yard.

Make sure "tinting" doesn't invalidate the warranty on your windows.

I am curious.... Do you have a home owner’s association in your community? Is it possible that your neighbor’s exterior lighting scheme is in violation of the HOA? In many sea side communities, even those without HOA’s, exterior lighting at the level of which you are speaking, is often prohibited because it inhibits the activities of beach dwelling creatures (like sea turtles, etc.). While you address your drapery issues, you might explore this avenue, too! Good luck. GORGEOUS views! Lucky you!

I would do cellular shades. They retract very nicely. My MIL has them in her sunroom and they are so nice. She doesn't try to hide hers but a small piece of trim across the top of the inside of your window trim would conceal them.

I would get simple top down bottom up cellular shades - they come in blackout.

We don't have a HOA in this area we are just neighbors along the beach road. I will ask the window people about tinting, and I am looking into cellular blackout shades. We have small bathroom window that lights up due to the next door runway, I mean neighbor's house. Since our doors have transoms that brings in light too. I think the cellular option would work there or at least I could tint the transom. In the meantime.... https://www.youtube.com/watch?v=X2LTL8KgKv8