I would probably lose the large wood frame and either have a mirror glued directly to the wall or use a minimalist frame as thin as possible in black.

If you have floor space in the room, could you build out the soffit to the floor and then move the vanity and mirror forward to your new full height wall?

I like the minimal frame approach, I’d also mount a height adjustable mirror to the side for more flexibility

*showing this one for concept, not sure this is high quality

the W/D is out into the room, Build out the wall and reinstall the vanity so it works for everyone... I'd personally build out the whole wall with a solid surface countertop and an undermount sink so you can use it as a laundry folding counter and a hand wash clothing laundry sink as well. add storage above as needed, shelves or closed cabinets.