Some frosting films and that would go transparent enough on that window to not be eyeproof. Sandblasting would frost it but the same thing, when wet it'll go transparent.

You will have to use an inner shower curtain to cover most of the window, or replace the window. I'd say replace with glass block, that would give you light yet make enough opaque to hide the naughty bits from outside viewing.

Having a bath next to a window is very different from having a shower. With a shower water hits the frame and can cause problems later on down the road. First of all ensure that your window has been totally waterproofed and then ensure the framing around it is also waterproofed. Is the window double glazed or not? There are some peel on films you can add, and a new peel on product coming out soon that can turn a window opaque at the touch of a button but I am not sure if it will work with double glazing due to thermal shock. Still enquiring....

Due to the amount of steam a shower generates, since it is not a contiguous wall, I think you would be opening your selves up to a huge issue for mold. Not to mention the bath products and oils contributing to the growth. Perhaps you can work the sinks into that portion by replacing 2 of the glass panels to support mirrors and lights.

I think it would make a great shower area! Just replace the lower portions of glass with ones that allow ventilation. If the bedroom needs natural light, you could extend the current wall with a glass one.
I also like lucido's idea of placing the vanities there- natural light when applying makeup is a big plus!

In today's market people prefer to have a larger shower vs. the soaking/jetted tubs (which usually just gather dust in most people's homes). If the existing window has a wood frame you will want to replace it when you put in a shower - you might consider either an acrylic block or glass block window to maintain privacy, yet have a window that will not rust or rot. I'll provide you with a couple of pictures to look at.

Is the 3rd image in an ideabook somewhere? I was just trying to describe to someone the idea of having the glass blocks as a barrier between the shower and toilet with the shower bench in that spot-- and also the shower has a window on the wall so this is very similar to the layout I want.

All the above blocks are from Pittsburgh Corning. Great Supplier here in Vancouver.

OH - LOOSE THE TUB!!!

Thanks, John. I really like how the glass block wall turned out in your install. I wonder if they make glass bricks with small channels that could have LEDs or some sort of optical fibers going through them to have lights that are sort of inside the blocks but they are not visible when turned off. I'm probably not making much sense.

As for the solution for the window, I saw a site that makes kits to put some sort of vinyl cover with glass blocks over a window. My browser crashed before I could read more though and I am having trouble trying to get pages to load.