Hi. I think that your instincts might be right. It could look a bit unbalanced. Have you looked at freestanding wardrobes? There are a ton of interesting and attractive options online that could fill that space ( and perhaps not crowd the ceiling). Maybe even cost less than a contractor 🤷‍♀️?

If you do build a bank of cabinetry and you keep the closet I would suggest building a door into the cabinetry that allows you to access the closet.

IMO a good closet wins and I do not think it will look all that bad . I use PAX form Ikea for great reaching closet design and BTW it needs to be a bit deeper than 26" At least one more pic showing the whole space and a to scale floor plan ill get you more actual help.

I would go with what the contractor is suggesting. And not worry about the tray ceiling--just let the tray die into the side & front of the new closet. Or remove the tray on just the window wall or from the room entirely.

I sure wouldn't let the tray rule over getting a decent closet. This is just a bedroom, not the front parlor.