So all of what you are talking about doing will help. Recessed lighting with dimmers would be the first recommendation. If you can’t do them, then get a large diameter, low profile drum shade light with a diffuser so you don’t have exposed bulbs. Wall washer light(s) on the fireplace and possibly the tv wall unit again if you can go into the ceiling. If you can’t do that, then add some under mount lights to the wall unit shelves. Amazon has some nice ones with a remote that are battery operated. Wall sconces on the wall between kitchen and family room or over the fireplace. I’d rather see a nice art piece over the fireplace which you can light up with a battery operated light from Amazon. A light background area rug with some green in it. Light throw pillows since the sectional is going dark. Use taller table lamps which will provide more light. I’d ditch the drapes and valances. Maybe just side panels with a light background and some green. I’d also put a graphic wall covering in the alcove. For paint, I’d go with a white with a green or gray undertone. Here’s a not so great mock-up lol.