Here is an image of another option

Yes! I think it would look great mounted above fireplace! :)

We go through this all the time on Design Dilemmas! Couple thoughts...typically on a mount like that people need to look way up and that can cause neck injuries. So when you are sitting on your couches, or most likely lying there, look at the space where the TV would be. Is it comfortable for you?

It looks to be a pass through on one side of the LR. Whats on the other side? Have you considered mounting it on that wall?

Mount it! It doesn't look right in front of the fireplace.

The tv in center front of the fp was just a temporary set up for our Super Bowl party. Here are a few more images of the room

Competing focal points are quite common in family rooms. It does look like you may have some space on the wall to the right. If that is the case that would be your best bet as your sectional current presents to both the fireplace and that wall. If you have the budget and really want to have the tv mounted over the fireplace, one make sure the tv is not a plasma and secondly you can have the mantle reworked to lower it and build a surround that will house both the fireplace and the tv.

Yes there is a pass through to the kitchen on one wall and the other leads to the main hallway.

If the budget allowed, I would build in the windows as well with window seats. This is probably not an option for most people, so I would definitely take a look at furniture placement and wall space.

Given the realities of the other three walls, above the FP may be the best place. I am not so sure about the TV on the stand in the corner. Looks somewhat temporary like that.

So. Then the thing is would the TV be too high with your FP like it is now? Sure seems like it. That mantle is quite large for the space. Now with the TV up there you wont need any place for knick knacks so one suggestion would be to remove the wood mantle and the two side pieces and just go with the simple tile (I think it is tile). That brings the TV down a few inches.

I would mount the TV by the couch wall and move the couch to the opposite direction. You won't have to look into the kitchen/or the other room.

More simple FP might help the overall look.

There's tons of examples where the TV is mounted very high. Or in very large rooms where the furniture was back a ways. MCD's suggestion of building window seats is a good one for balance etc.

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Thank you for all the thoughts! The mantel dwarfs everything we put near it! There is a paint job in it's future. Walls are going to be greige and trim white. This will make the fp even more prominent. Our hope is to make it more modern