You will need space to walk and for your feet if you turn the chairs around - if you put a divider in you will block the view from the dining table out to the balcony - and thus make the kitchen and dining room both have no view ! So if you keep it open, the natural light can get through !

First you need to get a bigger T.V and some surround sound equipment , a cabinet to house all the wires parts etc., blackout blinds for the windows and some comfy seating for at least as many people as you have living there. This will never be an actual home theatre as you can not close it completely but it can be quite good with some imagination.

It will be better if you don't think of separating it .

Let your wooden beam be as it is. put your Led lights in the other direction ( two on each side in one rectangle , so the total will be 16 units of say 10 watt each Led.), as to balance the horizontal and vertical shape. Don't put anything on the wooden beam to retain its the beauty.