Oh dear it is rather large and over powering isnt it! I assume the room is large?You have a lot of small decorations around the fireplace which is making it look even bigger. If you can I would replace the mantle piece with a wider thick piece of timber to balance the length of the fireplace without that backboard piece on the wall. the clock above is much too small you need less and larger shelves pictures etc around the fireplace to help it blend into the room, even the paint colour on the wall behind it is accentuating the fireplace by picking up the colour in the stone therefore draws your eye towards it. Is that a wood storage nook on the right? If so get those logs in there to help fill the space Its quite beautiful really just needs some help to fit in just must get the small bits and pieces out and add larger pieces you can still have the lovely photos etc but they need to be on a large shelf! large coffee table large lamps large vases and big flowers. hope I have given you a few ideas I am sure you can make it work! good luck

Now that is a huge fireplace. Do you have more photos taken in daylight with all the lights on? Additional photos showing the rest of the room (and ceiling) would get more advice.

What kind of lighting does the room have now?

Terrible lighting-2 corner ceiling eyeballs that we never use, and a few small lamps. New photos are with every light turned on & flash! Thank you for your suggestions!

Thanks for the additional photos. I think the room would be much improved if you added more lighting.

1) The Craftsman and antique style shades you have are dark and don't let much light out. Try picking out a pair of floor lamps or table lamps with white/off white shades. Use compact fluorescent bulbs equivalent to almost 100 watts each, or even better, try the new LED "regular bulb"-shaped bulbs that are coming down in price.
2) In my experience, people don't usually turn on recessed lights that illuminate just the fireplace, but perhaps you would. Something like your current corner clamshells would work.

3) Try LED strip lighting on the mantel as an uplight. It might look odd, but worth a try. To do this, add the strip lights at the back up against the piece of wood forming the back and then add a small piece of trim just to obscure the metal of the strips. Or put the LED strip light in front if you want to front illuminate your knickknacks instead of back lighting them. This would be the most fun because it is dramatic. Test it out with a string of cheap white fairy lights first.

Other ideas:

Repaint in a much lighter off white.

Pull sheer curtain panels to the side in daytime to let in more light.

Put in a light colored summer fireplace screen shaped like a fan. http://neatpleats.com/index.php?route=common/home

Think about adding a solar tube or skylights.

Add a light colored area rug.

Here are some curtain holdbacks: http://www.amazon.com/Umbra-Spool-Drapery-Holdbacks-Set/dp/B00069C6F2/ref=sr_1_7?s=home-garden&ie=UTF8&qid=1376748734&sr=1-7&keywords=wood+curtain+tiebacks

Thank you all for your suggestions! Fresh eyes make great suggestions! It's hard finding a screen large enough-they all look miniatures inside this fireplace. I had a painted floral one for a long time but wanted a change, and the black metal was all I could find so far.
We are pretty handy, just not imaginative!
What do you all think about bringing the stone all the way to the ceiling? Either just facing the wall or using true stack stone to keep the front of the fireplace uniformly flush? Any suggestions for appropriate lamps?
I'm so not a shopper--can you recommend any websites?

been thinking about your fireplace and see you have added some more photos what a great space you have i was hoping you didnt think I meant giant furnishings I think more solid and chunky may be a better descrption. You have the nice full chairs the rest or the funiture should have that look also and a large floor rug with plenty of texture will help to balance the texture of the stone work

http://www.lampsplus.com/products/maxim-lighting-10-39-led-tape-kit__x7053.html

I recommend just going to Target or Lamps Plus or any large department store to look for table lamps or floor lamps. Keep the shade lightness in mind.

I would also think about painting the whole room white, it really is a lovely room the windows look beautiful. but I would raise the curtaim rods and make the sheers much fuller two curtains on each window both the width of the window. it will make the windows look larger and more grand, with a light floor rug and a more solid and larger standing lamps and as has been said keep everything light in colour the more crisp white the better.The browns and the floor are absorbing all of the light! You will be surprised what a difference white and light makes!

I think it would be good to really pick a style first. The house is a farmhouse with a beautiful massive rustic fireplace, but the craftsman floorlamp is not, and neither is the little lamp next to the fireplace, it is something else...

What would you say is your style? I am thinking a rustic farmhouse look? I think a rug by the fireplace and chairs would be nice.

I am thinking the couch should be moved a bit closer to the fireplace and centered more on the fireplace opening. The chair on the right could be slid a bit closer in the direction of the piano.