I'd recommend you replace the mirror with large ones that extend all the way up and then have the light fixtures mounted through the mirrors.

If you aren't going to replace the cabinets or tub, then why bother. Nothing is going to "modernize" that 1989 beige.

You nailed it. We decided to replace the cabinets and tub. ☺️

Since the shape and style of the bathroom Architecture over all is 70s 80s contemporary though, I don't think I would stray too far from those roots. The cabinets and lighting were probably always a little too fussy for the house even if they are original, but this will never be a typical 2020s bathroom no matter what you put in it, because of the surrounding architecture. I think you could lean into it with a little bit better tile on the floor and a more contemporary cabinet style. Better colors will make a big difference.

I agree with Beverly and the full mirror with lights through the mirror. This bathroom was made for that look. The existing mirrors aren't actually too big, they are too small and should extend to the ceiling line and bottom of the window trim.