I've been racking my brain trying to figure out how to separate a room in our new house into a cozy area by the fireplace and a TV room. BINGO! LOVE IT!!! Something along these lines using old paned windows and maybe a built in cabinet below. :)
Consider tiebacks for the drapes - Cheers to the power of draperies! I always tell my clients the investment is worthwhile. As it may seem unnecessary, its often the best way to soften and add interest to a room. It's especially good for vaulted spaces!