Built in cabinetry for tv related items, i.e. amplifiers, dvd players, games, etc., could be both functional and aesthetically pleasing. Also, there are several companies who make great standalone fireplaces that just plug in, however look like they were meant to be. They are controlled by a remote and some actually really heat the room.

Agreed with some built-ins or create a paneled wall to create a focal point.

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Flueless gas could be an option - might be a bit late for chimney type ?

Electric fireplaces are surprisingly good -- but you could just put in a mantel as a focal point and fill the space with logs or books.

Take a look at electric. We just did a total kitchen remodel and we had a wood burning fireplace there already which we never used. We put an electric one in and I was surprised that the flames are very realistic. It also has a heater attachment so if we do need a little additional heat we can use it for that too. Mostly bought for decorative though.