I think the dropped false panel over the island is a good idea. We visited a new build recently that had a similar open plan kitchen/dining/lounge as yours and the three areas had been defined in exactly that way, i.e. sections of suspended ceiling with specific lighting that designated the individual areas whilst the whole remained open plan
I guess from your floor plan that the dining area is by the large window to take in the view whilst you dine? If it was me I think I'd turn the dining table through 90° and move it closer to the island, then spread the living room furniture out a bit and define each area with the lighting - minimising downlighter where possible. We had an extension done many years ago that gave us a large open plan kitchen/dining room and the electrician at the time cautioned us on too many downlighter's, especially if they are aligned, as it can start to look like a runway on your ceiling. I think he made a good point.
Love the bog, even without the pier behind it!