if you are going to the trouble... make them both the same.

I personally would remove all the sheetrock/plaster open up the area and square them off.

Then build something that suits the space.

Sorry construction novice, do you mean including the fireplace? I’m not a huge fan of the wall in general but had been told trying to fill the niches or change fireplace would be a lot more expensive!

It depends on the budget. doing anything with the Fireplace would include the flooring... opening a can of worms.

I would not alter the fireplace, looks like it suits your space, and shouldn't be affected by altering the area on each side.

Here is how the niches could appear if you do the remodel.

Change out that cheap mantle to a matching wood.

Definitely make them match.

The cabinets should match except for the size . I hate display shelves filled with mostly stuff not needing display so what do you have that needs to be displayed ? I would do 2 lower cabonest and 2 pieces of art above and be done . No mirror on the FP since it reflects nothing worth seeing twice and I toatlly agree a much nicer mantel that is the whole width of the FP and done to match the 2 new cabinets Please no mirror image placement of the stuff on the shelving no matter what.