I have the experience with rooms in rental houses. I'm currently making a 9' 2.5" x 19' a theater room. It's pretty awesome, a 106" screen with two Polk Monitor 70s barely fit on the front wall and nothing gets blocked.
A 12' x 10' you will be just fine with your setup. You won't be able to have multiple rows of seats, but you will be able to have a nice comfortable moving watching environment. You're looking at a loveseat, and you may have trouble throwing in a 3-seater couch. Even if it does fit, you have to walk sideways to get around it.
If you wanted to project, you could probably do a 92" image at the most.
You'll definitely have enough separation to do a 5.1, but not a 7.1-7.2.
I always recommend curtain panels. Not only do they give the room a nice look, but they help with sound reflection. You will have to drape the front window.