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.
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Lots of off-white. arched doorway into sitting area in Master bedroom, light flooring. Details in wall millwork. Sitting room above fireplace room in great room, with its own fireplace. Love love love the arched wall!