Whatever you do with the fireplace surround, the paneling between the windows should blend in with the wall better so it doesn't draw attention.

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Keep it simple, the windows are enough.

I'd start by Priming/painting out all the dark you have now. the wall color or the trim color.

Leave the mantel and the actual firebox AS IS. That may be all you need to do.

Is their another wall to mount the TV on?

Why does it need to be “rebuilt”? Is there an issue with the fireplace safety and functioning or is just a problem with how it looks?

What is wrong with the FP to need a redo

The inside has fire damage and it is not safe to use. I am replacing the old gas fireplace with a wood burning fireplace.

In my area it’s easier to have gas inserts updated than wood burningmake sure you have the right draw for wood fires

The look of your current fireplace is fine. It is the paneling that needs to be removed as it shouldn't be the focal point (the fireplace should be). As others have suggested, keep it simple

Would suggest you replace the windows if your budget allows. Would also suggest you remove the paneling if possible and replace with new gypsum board. If your budget doesn't allow for that will suggest that you paint the paneling the same color as the adjacent walls to make it stick out less.

Too many shapes in one place. Right now you’ve got rectangles, triangles, semi circles and squares- a lot for the eye to take in. Painting out the paneling will make for a less busy look.

Since the fireplace has fire damage, I would first have the structure, flue, and required clearances determined by a qualified fireplace professional. Once those technical requirements are established, I would simplify the design considerably.

I would remove the pointed top and the dark decorative paneling. The arched windows are already the strongest architectural feature, so the fireplace should have a simple rectangular shape between them rather than introducing another competing shape. I would finish the tall upper section in the same warm neutral color as the surrounding walls.

On the lower section, I would use one calm noncombustible material around the firebox — perhaps a large-format limestone-look porcelain tile or a simple natural stone — and add a substantial wooden mantel. I would avoid combining several different dark materials and would replace the small pebble hearth with a cleaner slab or large-format tile. If another location for the TV is possible, I would also move it away from the fireplace so the rebuilt chimney breast can have simpler proportions.

Because you are rebuilding the entire feature, it is worth deciding on the overall style of the living room before choosing the stone, wood, wall color, and lighting. I recently designed four completely different versions of the same living room, keeping a fireplace in every version but changing the colors, materials, furniture, lighting, and decor. Comparing them may help you choose the direction you want before the new fireplace design is finalized:

https://youtu.be/R-2ZyyBc6EY