Mark: Maybe you should keep the pink walls? Those are kind of cool! You have some real good specific ideas. That's a good start. One thing you can do to create the illusion that the trains are going somewhere is to have staging drawers under your layout. No one, not even folks with basements have enough storage space. A guy I know buys those plastic clear containers from Walmart that slide in and out like a small dresser. Those would be ideal for extra storage.
I see you want to run passenger cars. Since you aren't holding true to an area, purchase the early 1900s small passenger coaches and pull with an 0-4-0 steamer! MTH just recently came out with an 0-4-0 and it will look great in a smaller area.
I would recommend buying the under-sized (traditional) stuff, because the smaller stuff will look better on smaller curves. Even if you get full-scale "O" stuff, but the smaller pieces of equipment. Be sure to check out the MTH 44 ton switcher. It looks awesome and is small even in full size "O."
Please send me the exact dimensions for your room. Put in ALL obstructions including doors, windows, there size and hieight off floor for base of window etc. If there is any other obstruction, be sure to tell me. Usually, I would charge for detailed track design, but for you it's a freebie. You can come up with some really cool stuff in small spaces.
I like the coal and logging ideas....need to figure out a loads in and empties out for both...
