Thank you all for the helpful advice, wisdom, insight, and food for thought. I've been a follower of this site for a while now, but this is my first posting, and you all have been a very proactive and helpful group of people.
So after a long period of hard negotiation and brainstorming with my wife, I think we may have come up with a winner solution. Although it is still contingent on the answer to a question I have and the review from the wise men and women here. As you'll see in the revision below, we plan to make an L shaped mass. The short leg of the L will be used as functional seating (with a loop of flue inside), something we really couldn't do with the last model. It will also put the barrel in a corner which I imagine will help to direct the heat from the barrel toward the crowd better. The question however is that we would like the exit flue and the long end of the L to then make a 90' turn through the drywall (non insulated and steel framed) and into a hot water heater closet on the other side of the wall in a bathroom and from there go vertical into the attic and out the roof. The long vertical flue in the living room was a no-go for my wife as that is the main wall we look at everyday and if we were going to do it she wanted to wrap it with brick like a chimney and I don't want to box in 16' of vertical chimney, not to mention the cost. The difference now is that instead of just making one hole through the vaulted ceiling and out the roof, now we will potentially make three holes (one to go through the wall, then going vertical and a hole through that 8' ceiling, then through the attic and a hole through the roof). So how will these holes need to be negotiated? Double insulated pipe? Heat shields? Please note that we live in Rural Oklahoma and there are literally no building permits required of any kind for any work. I've seen some really weird construction out here ha ha ha. We can do whatever we want without complying with code regulations, but we still want to be safe, and we don't want to get ourselves into a situation where we have a fire and the insurance company won't cover it because we were grossly unsafe or something. Also we will make sure that if we ever do sell this house that nobody uses these pipes for a regular wood burning stove with much higher flue temperatures (obviously). So, is that a viable option? It would at least give us the long vertical exit flue mostly in the interior of the house as recommended, and the attic is very well insulated.
Also note that in the crook of the L, we have thought about doing two 45' angles instead of one 90', in order to give us a seating spot right in front of the barrel as well as to potentially use it to dry out the next batch of wood, or wet clothes or whatever. Are two 45's less restrictive than one 90' elbow?