Made some real progress today.
Went through the whole thing with E.G. When I got to the part about maybe putting the chair there, he said "Really? It fits?" and then when he saw how it fit he said "OK I love that idea. We have to do it."
He sits in that chair more than anyone so I wanted to kind of defer to him on that... I worried he liked the current set-up and didn't want to mess with anything. But he loves the idea of moving it there, and said very similar things to what I said ("best view in the house"), and I think that decision has been made. (Not just that he likes it but that when he said we should do it my reaction was "yay!")
So... no chest! No windowseat! Even, at this point, no pillows, though I may return to that idea.
The chest is going to go in another corner of the bedroom, against The Wall. This isn't super-swell placement but it's not the end of the world, and E.G. agreed that we're just going to be taking this in steps and it's not going to be perfect right off.
He followed my thought process very closely on window treatment for the nook window, again saying many of the same things I said here (didn't like the idea of a bunch of fabric over the blank wall, didn't like the idea of short curtains), and wound up liking the wood blinds idea. I've received my blinds sample and we looked at a mahogany that goes with a lot of our furniture, and a red oak that goes with the bed. (Even though the bed is cherry -- color is very similar.) The mahogany goes best -- most of the wood we have in the room is mahogany -- but that's kind of arbitrary (as in, we have cheap mahogany-colored bedside tables from Bombay Company that were bought for cheapness rather than wonderfulness) and what we really like is oak mission furniture and we'll probably eventually migrate to that anyway. (The headboard was a steal on Craigslist, won't be too sad to replace it with a real bed at some point.)
Now I'm looking at sconces for behind the chair in the nook -- have found some beauts.
I think that'll be really pretty at night, too, just lighting-wise.
I think blinds, a sconce, and the one curtain rod will end up being the main expenses -- then will be about arrangement of what we already have (especially frames/ pictures on the wall next to the window).
Oh and a foot stool. Definitely keeping an eye out for something interesting and may still bring fabrics into play in reupholstering something old.
Will bring "after" pictures though they probably won't be too dramatic... work in progress...
THANKS so much for your help and ideas, everyone. E.G. also loved the idea of making that a door to a deck and/or breaking into the closet to enlarge that area. Waaaay down the line though.