Take them up so they are 5" below ceiling. The pole should also extend past the window 3"-6" on each side. You may not be able to to do that on the right side there but you can butt it against the wall

I would go to the ceiling and beyond the trim on the sides. Have you considerd a roman shade rather than curtains? You could mount the header of the shade above the window for a taller look.

Yes, go to the ceiling -- or within a couple inches of the ceiling. It's a classy, traditional look that'll upgrade your room.

Different topic: ARE those curtains? Or are they sheers? They almost disappear into the light. I'd go for a more substantial curtain.

Things to think about:

Curtains look like sheers. You can see the wall when curtains are open or closed

Ceiling looks to be 9-10 feet. Is an illusion necessary?

You will want to make sure there is wood beneath wallboard at the desired bracket locations. Window header could be near ceiling or window.

IMO hang those just above the trim sheers look goofy when hung to the ceiling with the window always showing and too much wall showing above. I think a roman shade would not be good since that is a very long window the shade will be too heavy .Is privacy an issue ? Maybe no drpae at all might be a good idea, but I need to see the whole space . Is this the only window in the space ?

I want to get curtains as these are only sheers. There is a matching window on the other side of the fireplace.

Drapery panels mounted 5" down from ceiling with your blinds

Mounted with a woven shade up high to rod height

IMO the current height will work fine with your windows, however since they are sheers I would double the number of panels on each side of the rod so they don't look so too skimpy. You want a lush appearance and not like just some fabric hanging on either side of the window.