You could create an ensuite by borrowing space from the second bedroom, accessing it from the master. I would create one large luxury family bathroom by joining the current bathroom and the adjoining room into one. If you don't want to lose a room, you could swap the purpose of the two rooms, creating a medium sized bathroom and a small box room/study (expensive for some benefit). Lastly, if you really want to maintain the number of rooms but gain a bigger bathroom, you could move the family bathroom to the bottom, right-hand room, if plumbing allows. Hope this helps.

I agree, I think the kitchen units are quite charming. The tiles date it, the top of the dresser and the piece over the window. Agree, would paint the ceiling a soft chalky white. I know they're becoming a little overdone but metro tiles would suit but handmade ones in a soft white unless you just remove the tiles altogether and have a splashback by the oven. Can you afford to update the floor? The dresser offers good storage space, have you considered either just removing the top half or updating the top so changing the architrave and glass panes? The fire itself looks lovely, do you need the heater in front? I also like the brick but the recesses are dating it. I definitely wouldn't paint the brick, if you were to do anything I think it would need plastering over to cover the niches unless you are able to match the brick. Do you have a better pic of the firep? If you are set on painting the kitchen units, I would look at the really dark greys and inky Blues for the base units, as I think they'd suit the style well, with brass cup handles with a very pale grey for ŵall units. Or if you want the same colour units, look at a mid tone grey.

I need to paint the house in the spring to protect the plaster, white is the easy option but not necessarily the best

I prefer the flow and functionality of option 1. Would you consider merging the utility and bathroom into 1? With downstairs bedrooms, you have a challenge with noise, especially if the loo is your main downstairs facility. So noise insulation will be key. There are lots of great products that you should get advice on for the partition walls but also between floors depending on what is above the bedroom.