The apartment already exists, but we are renovating it before moving in. This includes furnishing (including media wall carpentry), and doing some limited infrastructure work (like passing conduits for audio cables, etc. for rear speakers and potentially in-ceiling Atmos in the future). But the hard tile will remain - we won't be redoing the floors, etc. The amp and the media center PC will be inside the media wall. I'm well aware of the ventilation requirements, and will take care to integrate it into the design - right now, I'm focused on the external looks of the media wall.
Wife does not mind sound quality (as long as it's not something problematic, like muddy dialog). If I was out of the picture in the living room design, she'd simply use the built-in TV sound for the cleanest look and be fine with it. She does recognize that sound is important to me, and is willing to compromise the design if needed (e.g., she doesn't like the nooks in the picture above, but is willing to accept them).
However, after discussing the issues with all of the options above, the option of pulling the speakers completely into the room (without nooks at all) was raised, and not completely declined. Of course, it's less desirable aesthetic-wise - but if it resolves all of the sound issues, we may compromise on that. So, the media wall would be smooth, like a closet - and the speakers would be in front of it (as close as possible without destroying sound quality - DALI maintains that 5cm should be fine for OBERON 5s). The question is, would that work, or would I be stuck with other issues I'm not foreseeing?
It's also important to clarify my expectations here. I am not looking to achieve the perfect home cinema sound here. It's obvious that the space is not optimal for that, even without the media wall. I am mainly trying to avoid mistakes that would make the sound quality disastrous. If a setup is possible that would make the sound quality not optimal, but overall fine, without any glaring issues, I would be fine with it - if an average person wouldn't notice any issues with it and think that it sounds great, chances are I'll think the same.