As long as all the bricks are below the line of the wall, then using bonding to level the wall, and then skim the whole wall. But you need to seal the old chimney first with a good stain block, or the soot will stain through the bonding.
It would help if you would post a pic of the left hand side of the living room c/breast?
And, after clearing the rubble, & opening up the lower c/breast, a pic showing the open flue at floor level.
Patch a temporary piece of ply over the bed room hearth hole.
Remove all skirtings if you intend to re-new skirtings.
Remove all fixings & ledgers from all walls.
Remove any wall paper from all walls.
Prep all walls.
Do all house plastering at one go.
Put a straight edge horizontal across the flue opening, & work up from floor to ceiling, & knock off any high plaster as it shows.
Take out all the lower infill, below the opening in the c/breast, down to hearth level.
Wire brush all the sooty bricks.
Then apply two coats of SBR.
Do not use any liquids or stain blockers on previously sooty bricks.
Render the openings with a 3:1 mix of sand & lime.
Do not use bonding or any other gypsum plaster.
If that is a gable wall then carefully examine the outside for ghosted soot lines.
Do you have a basement?
Where is the fireplace in the front room?