Love the thread title, thanks so much for the pics/diagrams (helps us cut to the chase, and avoid wasted time/typing), and funny avatar too.
generally, lengthwise setup is recommended for audio, and hence I always recommend, well, lengthwise setup. I also always root for the larger room, because, well, I like HTs!
So, I would've voted for the larger room if the fireplace wasn't there. I'm not crazy about you losing space on either side with a width-wise setup there.
Therefore, I vote for your L-room diagram. It minimizes wasted space, you don't have to deal with very unwanted nearby boundary effect of the rear wall, it'll be easier to control light (I think*), it gives you future flexibility for another row, and or projector setup.
I just calculated for you (hopefully correct), that you can fit a 118" 16:9 screen there, and still have slightly more than 2' on each side for a speaker. If you're fine with putting speakers closer to the sidewall (compromise) than you can even go bigger.
I'd black out, darken, or use curtaining on the front wall, and the side walls up to the point where the short right wall ends. I like the curtaining idea particularly, because that can hide broadband acoustical treatments.
BTW, I'm just speaking from the tip of my tongue on what I would do*. Subject to change*
EDIT: btw, THX would have you only 5' away from a 46" screen. OTOH, the recommended starting point for listener positoning is 38% room length, whether from front or back in symmetrical rectangular room. Yours isn't symmetrical, but that # would be 7.75 ft, FYI.
EDIT #2. Sorry, I don't know why I was thinking 46" (confused with multiple threads). 60" THX distance = 6.7 ft.