I'm disappointed nobody has offered any suggestions, because we have the same kind of situation. Did you ever come up with an idea?

No to Roman shades if you need privacy they will be down all the time. Use side panels and a solar shade that lets light in but provides privacy.

https://www.houzz.com/hznb/photos/smith-and-noble-solar-shades-contemporary-bedroom-san-diego-phvw-vp~104768527

I would use white plantation shutters. You can leave the top half open for light and adjust the bottom for privacy. They would work nicely with the window seat.

I like white solar or cellular shades, because both can be opened completely or closed to any length and both let in a good amount of light. Celluar has an advantage because of the top/down/bottom/up version and will provide privacy both day and night when closed, In your case, you can leave it open on top (and even the bottom) to cover up your neighbor's window, yet let in the sun. I like 1% solor shades because it provides a good amount of privacy at night, but it does not allow you to see the view during the day. I use 1% solar in bedrooms for privacy and light control. I use 3% white solar shades in my living room--but it provides very little privacy at night, however I like the 3% because I can still see the view during the day and it offers privacy during the day. Both solar and cellular provides a bit of insulation and sun shading and both are not high maintenance like a horizontal blind would be. With either option, you can keep your side panels for added privacy and layering. I don't think roman shades will help in your situation. If this were my window I think I would do top/down/bottom/up white cellular and leave the drapery panels in place. Just so you know, you will have a thicker top rail with top/down/bottom/up.