The new problem that would likely be created by removing the TV niche is how to fill in the area with no flooring under it. What’s on the kitchen side of that niche & how wide is the top of it? Looks higher than counter top height.

Use it for storage -- either for the Family Room (facing out) or the Kitchen (changing the opening so it faces the Kitchen).

If you can get cabinets to match, you might consider replacing that whole "piece" with a matching cabinet facing the Kitchen...although I would probably have a very shallow pony wall behind it like you have on the other side so it matches.

I wouldn't put any seats there b/c of the proximity to the fireplace -- unless it's one of those that just has an electric flame to simulate the look of a real fireplace (and no heat).

It’s not symmetrical now so removing it entirely wouldn’t make for an unbalanced view.

I agree to remove it completely if you can.

It will really open up the space nicely.

Make sure there’s flooring under there or you have more.
And that it isn’t structural…

I'd look into adding shelves to the hole and putting a complete wall above it. Hang the TV on that instead of messing up the FP to end up with an oddly-positioned TV.

What do you think if I tear down the niche on the right and the peninsula on the right, and put in a large island?

I mean the peninsula in the left…. There’s a sink and dishwasher there right now

Here’s the view of sink and dishwasher

Have to figure out the space as walkways needed on both sides instead of only the middle. And, the flooring - are you up for replacing all flooring?

Having an island, that moves your sink and DW over more parallel to the cooktop, seems great. But if I were doing that in your space, I would also want to move a lot of other things. Probably ovens where the pantry cabinet is, pantry and fridge on the short wall where your ovens are. Might be best to just to do a small reconfigure to the niche right now, and save for a full kitchen remodel. Fori's suggestion of extending the wall and hanging the TV there is a good one.

The fireplace is too oddly placed for ambiance or warmth …the niche is not useful in any way…and the peninsula needs to be deeper for comfortable seating… a new layout without the fireplace/ niche …may even offer a nice spot for a table and chairs…a flooring change in the kitchen area will simplify the flooring issue…enlarging the peninsula top for a more useful depth for both dining and kitchen prep use will also allow for some comfortable seating there…

One last thing to consider is if you change the peninsula…a wood top (or at least trim) would look/flow better with the living space

There is one blindspot in your photos….are there cabinets behind the fireplace?…

The fireplace looks like it was an afterthought.

I would remove both the niche and the FP or remove the niche & move the fireplace to the left so that it is centered.

Yeah sorry there’s no picture if what’s behind the niche and fireplace. It’s just a blank wall