I am currently working on a kitchen remodel and next to my kitchen is the living room with a fireplace all the way to ceiling. We are thinking of ideas to redo the fireplace. One idea is to cover the fireplace with drywall and make two big rectangular holes (one for electric fireplace, one for hanging the TV, something like this). However, we are worried that: (1) electric fireplace may look cheap. (2) losing the fireplace appeal.

Another idea is to hang the TV on the other Wall as labelled in the photo and keep the fireplace as is. Maybe get an insert fireplace to put in there (but might be difficult due to rough edges of the stone fireplace). Any suggestions?