Dawn, please feel free to browse our portfolio and design ideas gallery, we hope it will help you come up with some ideas. But looking at your yard I think the first thing that comes to mind is planting to soften up some of the hard edge work. Maybe consider matching the coping with the stone you go with. It has a nice flow to it and will also soften the area around your pool.

I've done the indoor pool upgrade as a retrofit of an existing pool...and yes, just dealing with the moisture is very expensive. We put in exhaust fans on humidistat switches and an automatic pool cover...This was in Indiana, so the weather differential was huge....15 below outside and 80 deg. water? Instant fog when the cover came off. Fascinating idea...cutting through the foundation with a pool...structurally challenging. Just remember, anything can be done for the right amount of money...just how much money is reasonable for your area, for return on investment, for enjoyment in the now...all your call. I do think, as an extension of ReSquare's comments, that a team approach to the project would be beneficial. Engineer to make it hold water and stand up, architect to bring design and aesthetic, with GC to bring real world experience and problem solving with an eye on the budget. Some can wear more than one hat, like ReSquare as architect/GC...but this project is going to need a lot of hats with a lot of brains under those hats.

Give it a whimsical spin to reduce the "chilly" factor. Maybe go undersea glam--hang layers of muslin dyed varying watery shades on the toilet/sink wall to mimic drapes/waves, a pearlized finish on the ceiling, crystal chandelier drops from the overhead venting, clusters of small round mirrors to imply bubbles, and something sandy on the floor--some kind of bamboo or grass matting. And absolutely anything but the light that's in there. Otherwise, go nuts with a rustic camp theme--walls of reclaimed wood (pallet or otherwise,) whitewashed maybe, lots of mismatched hooks for towels and swimsuits, rough wooden boxes holding spare towels, sunblock, so on...a big basket of water toys, maybe hang some kooky inflatable from the main blank wall--an alligator or killer whale or something equally silly. A big, over-the-top ornate mirror with some of the gilding chipping off, a kitschy little skirt around the sink made of tea towels from resort towns...that kind of thing.

Check out this similar concept: The lighter walls are Farrow & Ball Purbeck Stone; the darker Dunn Edwards Looking Glass (with a silver leaf block print by Taylor Kincaid). The soffit and drop is Farrow & Ball Ammonite. The ceiling is "Papyrus", a Venetian plaster by Interior Art. Changing tones in architectural planes really "pops" the detail.