This is a nice-looking living room with smaller rug. Perhaps the key is to frame the rug with sofas / sofa and armchair combo / sofa and the window. And another trick is to fill up the room so the size doesn't look awkward.
I like the way they did this harth and the color painted behind the stove. I also like the wood beams framing the stove in. Maybe have similar framing and the make a gate around the stove out of the same wood.
Looking for cosy living room decorating ideas? Take a look at this rustic country living room from Country Homes and Interiors for inspiration. For more living room ideas, visit our living room galleries
Pretty Corner Stone Fireplace - stone is Owens Corning Cultured Sone - Country Ledgestone in Chardonnay, the trim stone around the opening is Trim Stone in Taupe, the Auburn Mantel Shelf is by Pearl Mantels. I love the mantel and trim stone.