Is it possible to have a "dedicated" home theater in a family room?

Have you thought about a pulldown screen to use during movies and just keeping the flat panel in place for all other events? That approach is extremely high on the WAF factor.

How much larger are you looking to go? It looks like you're fairly close to the side wall in that pic.

Proscenium

You may have to move to plan b. Buy the wife lots and lots of stuff. It may take time, but she'll come around.

If you're wanting to move the flat panel, are you going to do an independent set of speakers for it? Are you going to leave your speakers set up for the screen? If you'd like to use your speaker system for both display devices, I'd imagine you'd want to stick with the pull down method.

I'm assuming that the fireplace you want to mount to is in the same room. If I'm wrong, then disregard this.

My $0.02: I hate to do it, but I kinda have to side with your wife on this one. Would seem a bit odd to me to have a dedicated screen wall setup in a room like that with a plasma on a different wall. Maybe you can find a bigger drop down screen? Stewart has some great in-wall products, but they are $$$. Good luck.

Biggest mistake people make with rooms/space in their home is naming it - Family Room or Dining Room or whatever - IMO - only kitchens and bathroom can and should be named - once you lose the name it becomes just space and you can use it for whatever you care to.

Our relatively small home came with an open floor plan that included a "living room" area and a "dining area". Over the 20 years we have lived here seldom has any of that space been used as tradition and room name would suggest.

One side of our the "living area" has the 56in TV and across the other way of the room the projector is shelf mounted and the screen is this big gray fixed thing on the wall - she agreed we could cover a double window with the screen - who cares what it looks like being there all the time?? When the lights go down and the big screen lights up we are "at the movies!!"

When it's time for television we have that little but nice TV.

"Dining Area"?? For 9 years it had a pool table, bar and shuffle alley bowling game - eating? Done at the kitchen counter or sitting in the big comfy bar chairs. Now the pool table and shuffle are gone allowing the bar to face the big screens with four pinball games, foosball and arcade quality coin-op dart machine.

We really felt like we had been set free once we realized that interior space can and should be used creatively to make our home customized for our comfort - not to meet some societal/tribal suburban tradition.

Sorry to rattle on so - pull the tv off the wall and get that big screen mounted - fixed or pull down or electric - main thing is graduate from television which cannot achieve Theater in the Home to the projector and screen.
Enjoy Your Space!!!