Doesn't look like the "designer" attended any interior design school, and probably failed high school math too ...

It is all about math/numbers and proportion.

No one can help you unless they have an idea of the room layout and every dimension in the space.

Is this your starting point? Are these your existing windows?

If that's the case I'd fix or remove the windows.

I'd rather have no windows than those two. They appear to be appropriate for an MCM ranch house, not a Tudor bathroom.

I have no idea without actual pics of the space at least

Sorry for the lack of measurements! The alcove is 8’4” W, 11’ T, and the windows are non negotiable!

I think the panels are a bit busy and too traditional for what look like more modern windows. I like Beverly's idea of a beautiful wallpaper in the alcove to make it really special.

I would not do paneling with those windows. I'd do tiles to a little below where the wires are sticking out and wallpaper above. If you really want paneling you should make the panels the same size and shape as the windows, with no more trim than the windows have. Then, figure out how to place them on that wall to evenly space them. But, really, in an alcove behind a tub, they're going to be very hard to clean and they will get dusty, if not have soap splashes on them.

Have you had picture frame molding before? I had it in formal rooms in a previous house and would actively avoid it again due to the more time consuming cleaning aspect of it-especially in a bathroom with damp + dust. Your arched nook and free standing tub are eye-catching enough without the business of a feature wall of molding.

There are numerous ways to address this area. I don't get the Tudor arch added to the entry to the alcove. This isn't a 20 x 20 bathroom. You might need to scale down your inspirations.

Maybe the panels are better on the side of the deck for a tub. The free standing tubs are not the be all end all.

Here's another way to add peneling to the room.

Here is another tub with panels on the side of the deck.

Maybe the solution is to duplicate the window size ratio in tile by selecting decorative tiles spaced with plain tiles.

I was going to suggest a wainscot high paneling to the bottom of window. That would bring the ceiling down in the sliver of a space where head height is in a tub. And because the window size/proportion/height and muntin is doing you no favors design-wise, so don't try to incorporate them in any way that brings focus to them individually.

Then I was evaluating how that wainscot would look with the rest of the bathroom, how it would transition to no wainscot, or around the arch, and I am not sure about the arch style, or how the flanking walls angle in and where the focus of the bathroom will be based on layout and other finishes, so I am not fully bought in to any paneling at all. But still decided to throw in the suggestion.

Edit: Looking more, if a wainscot probably half-way up the window to account for the flanking "up" wall sconces and might nest the window to hide it's proportions better.

Just want to thank all of you for your thoughtful discussion about our project. We feel like we’re on the right path now with the design decisions. Just for fun, I’ll come back to this post in the months ahead and show how it turned out. I think you’ll like it!