(Click through to see bigger photos and the demolition and construction process.)
Next step is repainting the living room. I'm thinking I'm going to make the ceiling Benjamin Moore Vintage Wine and the walls Benjamin Moore Wasabi.
Here's a picture of the two colors together, ganked from the Benjamin Moore site:
Imagine looking up at the Vintage Wine, with the Wasabi on the walls around you. Along with the brown furniture and white mouldings. I think it works.
Also going to do some wainscoting on the right-hand wall, probably something like this with a picture ledge on top.
I really want to put up crown moulding too, but it's expensive. I might see if the Boston Building Materials Resource Center has any.