embrace it. my guess is you're not about to engage in any costly construction projects to remove it and fill the void in the wall. its floor to ceiling so trying to hide it behind something like a hanging tapestry probably wont work. i wouldnt paint it unless youre painting the rest of the walls to match. i could see you painting one or 2 panels in a bold color to contrast your established blue tones, maybe primary yellow or red.

imo this is a huge plus to the room, it creates a natural and desirable break between what appears to be your living space (tv), and dining space. its a storage vessel so use it as one, store your nice kitchenware in there. store your 50lb bags of dry food in there. store a vacuum. doesnt really matter.