Hubby is so right! And you agree with him, which makes it all copacetic. There’s way too much to deal with in one post!
I think going super funky and bright in the entry and up the stairs is an excellent idea. Whatever you choose, as a responsible home owner — go two steps further, because restraint is not what you need. White seems to be the obvious – there must be some reason you’re avoiding it? Whatever color you choose, it should be pure, and you might want to go with a cool palette — the wood is warm enough. Don’t use flat or eggshell – semi-gloss will give you far more light. Definitely paint the radiator to match, and upgrade the switchplates either with color or a matching wood.
The first thing to do is treat the alcove as its own space — the couch blocks the window and the fussy bits of furniture and art stuffed into it don’t help; neither do the awkward bits of wall. Inside the alcove would be a good place for a satin or reflective print wallpaper — the choice is endless, of course, from a modern foil print to pastel self-stripe — with translucent drapes pulled back to both soften and define the zone, and make those awkward bits of wall disappear. A low daybed-style seating should fill most of the alcove, with excessive cushions — I don’t suppose you would consider going for a brighter, modern morocco feel? My other choice would be mid-century modern, clean lines, very easy to find and a good link between period architecture and modern deco. I love the chair, it just needs to be recovered in a brigher fabric. A small, taller coffee table, such as IamShelly’s picture, would be a great replacement for the dark one you’ve currently got being all grandma-like. Leave air space in there — don’t stuff it with tables. Lose *all* the little trinkets and doodads in the room, and the dark rug – bring in brighter colors in a modern rug, and replace the little table by the stairs with a low coffee table, with a modern table lamp to offer mood lighting, and an oversized-for-the-space photograph or painting hung low on the wall above it — maybe a family portrait? Change out for a less dated chandelier – maybe modern wood? – and add a mood-setting pendant lamp to one side of the alcove. Everyone will tell you that lighting is key — that’s because it is. Be very bold, and install dimmers.
LARGE picture or painting on the wall by the stairs/window. At least as half as large as the window. If you need more privacy from the window at the head of the stairs, consider using film, colored or white, or match the alcove’s drapery. I think staircase runners are old-fashioned dust-catchers, not to mention hard to vacuum. If you want to break up the monotony of the wood, you might consider staining a figurative flourish or even just a graceful stripe on each step, to give a twist to the idea of a runner.
I wish you could take out that wall on the left side of the fireplace, and open the passageway into a more seating-friendly zone for the fireplace, but I suspect that it’s a bearing wall. You might consider losing that closet door entirely and decking out the space as a decadent reading nook — you could funk it up with the same wallpaper, run shelves up high, to the right and left, gather up favorite trinkets that make the house too ‘grandma’ and would otherwise have to go (including the 20 bits & bobs on the mantle — no! no!), jumble them nicely, and then light the collection with a few small accent lamps. If you set the seat in high, it will look natural to have a low ottoman in front as a step up. Add a comfortable boudoir or papa bear chair (I’m going with the mid-century modern) and a velvet floor cushion that matches the tiles, and you have seating for four at least. Alternately, lose the table by the stairs and have a wheeled ottoman or the chair there.
Most importantly — less, and larger. If you want a candlestick, get a 3-ft candlestick and set it beside the fireplace, don’t throw four little ones on what should be a clear mantlepiece. If you want to draw the green of the fireplace surround into the alcove, don’t be shy – have one large, impressive vase or ethnic hanging rather than a grandma collection of glasswear, little pictures and enamel boxes! I love the idea of blue and white (or turquoise or jade and white) it would be very fresh. But then choose your ethnic rug with care — you want it all to come together!
Weird as it might seem, if I had the place, wallpaper that mimicked veined marble would be absolutely irresistible. Entry, reception room and right up the stairways. It would *so* balance out all that wonderful wood! I’m not recommending it… 
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