wow its pretty space..

I would get an area rug and then move those two chairs on either side of the fireplace facing the couch and a bigger coffee table. I would also get patterned panels for the windows and hang them almost up the the first moulding to the floor. It will raise your eye up. Yes, a sectional would be better . Beautiful space.

2 sofas facing each other, flanking the fireplace would open it up more to the breakfast area.

What a beautiful space...I would add some color along with that how about putting some furniture on an angle..maybe dining room table. I think you are right with defining of the space. An oversized area rug with some furniture to scale. With curtains as we know the possibilities are endless. My choice a pattern but simple and discreet.....have fun. What ever you love is what matters . Would love to see it when u are done......Lisa

sectional would be great..my only concern with them is ...if you are like me I love to rearrange furniture. With a sectional it doesn't always have that option.