A fireplace in a children's space doesn't have to be a liability. You can safely close and cover up a working fireplace. But don't hide it; flaunt it instead with this great idea.
Paint over it with chalkboard paint and turn it into the fanciest chalkboard around. The mantel is a great place to display toys and artwork. I like the look so much I'm thinking about putting in a mantel in our new playroom to get the look.