ooh i'd love to have that space because i'd hang up my favorite large painting in there. and maybe some vining plants on the bottom shelf to drip down in front....

think large pillar candles in different varying heights. Say your decor has blue/(....color here), pick up some of that blue by buying some blue colored pillar candles and put them there...imagine the use you'll get out of it with this cold season coming...imaging warming up by the alcove "fireplace."

You could do the usual and just stick some vases, etc. in the space or you can be different and hang some art in the space...either something as big as the alcove or several smaller pieces to fill it.

I smell bookshelves...(see the attached link)

http://i12.photobucket.com/albums/a239/WhiteGirlStereo/hue%20and%20timber/2005_01010145.jpg

Just get some floating shelves (hello Ikea) and alternate with putting each other shelf closer to the otherside. (ie shelf 1 flush left, shelf 2 flush right, etc) Then you have space for decorative items as well as taller vases and such!

Or paint the inside (or use contact paper) a darker color and hang a cool framed piece of artwork.

Or a large piece of antiqued mirror (or a gold or other colored mirror) inset....feels like a window and opens up the pace by reflecting lots of light...

if it's in dining room, why not install shelves and use it to display favorite dishes and glasses... if you don't own any worth displaying, hit up your local flea market for different vintage pieces whose patterns compliment each other...

An amazing three dimensional wall sculpture that you don't have room for will become an amazing two dimensional painting that changes with every viewing angle.

Yes, I think shelves would be the obvious answer...at least that is the first thing I see when looking at the picture.

Like twoeight nine, I vote for a sculpture. It would produce a nice shadowbox effect too.

Put a glass shelf at the 2 foot mark and make it a bar.

I think this is a fantastic opportunity to do something cool! I second the "fireplace" idea, and I would like to suggest that you buy a large, framed mirror-- maybe an Alameda flea market find?-- with a cool frame that almost fills the space and hang it in the back. I'm picturing some big Victorian-style mirror with that you can spray-paint a fun color, but it's up to you. Then place one of those "fireplace" candle holders-- or a couple, since the space is large-- in front of the mirror. The mirror doubles the effect of the candles and makes it an even better light source for dinner parties.

Ooh, it's a built-in shadowbox! Instead of putting art in it, I would turn it into an artful, site-specific installation of sorts. Put in various objects, somehow grouped by color, shape, or theme, and then switch it out every season or whenever. It could be a fun excuse to display some things in a new way, or even collect things just for display. [Unless, of course, you really need the space, in which case the landing strip or bookshelf ideas sound very practical, though maybe less fun.]

I would fill the area with vintage mirrors in ornate gilded frames and of course some candles. It would give a nice focal point for a room without a fireplace. And I of course thought of making it an art alcove with a great large scale canvas.

I don't know your style, but if it were me I'd find some faux-rattlesnake fabric in an improbable color, put that up in the back, get a piece of antiques mirror cut to the size of the ledge, and yes, make the most swanky bar this side of Goldfinger.

I think it would be cool to use it as a rotating display space for seasonal themes, i.e., a cornucopia for Thanksgiving, a flag for July 4, flowers for Memorial Day, pumpkins for Halloween, baskets for Easter, a menora for Hanukah (if that is your thing), etc.

I have a similar situation. I put in a row of picture ledges from Ikea (I think they are called Strip and come in 30" lengths)... then I placed all my framed art on there, overlapping in places so that it all fit. It's not neat and tidy, but I love how I can rotate my art and add to the composition without having to drill holes for hanging. Room and Board also has beautiful picture ledges, but they are expensive. If you do decide to go with this, just make sure you buy a picture ledge with some kind of lip at the edge. There are a lot of flat profile, shallow shelves out there, and if you attempt to put framed art on them, the frames will slide right off the end.

STICK A TV IN THERE!

http://sanfrancisco.apartmenttherapy.com/sf/012607/home-tech/how-to-make-your-own-dual-purpose-tvmirror-017037

I hate to say it, but...decals, decals, decals.

You could run two wires across its width easily, and then use clips to make it into a place to display prints, postcards, notes to self, and other scraps. Keeping plants along the bottom shelf makes it alive.

I'd love to see the rest of the room, as that would change things! If it's across from a window, I'd want to get as much mirror in there as you can afford. Then change what's on the shelf seasonally! If mirrors would not reflect an attractive view, then no mirrors!

You could put a series of tall bowls or empty plant pots and use them as catch-all containers for little things like spare change and bus tokens, or even conversation pieces for dinner guests to play with.

You honestly have no idea? How do people get such cool houses yet have no creativity whatsoever?

I'd buy white contact paper and cut my own damask decals to create a subtle feature of the space, then display my favorite art! I wish I had fun spots to play with in my rental!

I add a shelf in the middle and either make it a bar or a tiny built in china cabinet to display "pretty" serving pieces.

I would probably go with the practical and use it as a bar area, for some wine storage, or as a display area for interesting-looking but rarely-used serving pieces.

use it to display art.

I would mirror the back and install glass shelves.

I'm on the same track as Original A and Maureen: Mirror the back, add a glass shelf or two and fill it with assorted bottles of booze. Viola! Spiffy bar.

I think a seasonal diorama would be interesting...You could build little shelves/boxes and put found objects...words, pictures, textures...whatever is going on in your life at the moment. Sort of your own little mini art gallery.

I like the suggestions posted so far but if your niche seems very close to either a corner or a larger peice of furniture (hard to tell from the photo) you may not want to draw attention to it by filling it up. I like the idea of hanging a mirror and treating the niche as if it was another window in the room. You can make the niche feel larger, smaller, or more centered in the room by how you hang panel drapes around it. Making it feel in proportion to the rest of the room is more important than how you decide to decorate it.

I'd find or have made the sparkliest most beveled mirror that would throw the recessed lighting all over the place and then across the bottom fill it with silver and mercury glass and crystal candles

ie the mirrored fireplace idea that's already been said

this is a little wacky but I had a friend who moved into an apt with a smaller alcove and the previous (religious, greek-orthodox) owner had created a little shrine there. It looked beautiful: old-world icon of Jesus complete with gold halo, candle, incense burner, small plant, whatever. I am atheist but there was something very warm and personal about the alcove and I looked at it more as the kind of cultural and artistic space devoted to tradition, contemplation, etc. that you never see in the big city. It was striking and definitely different from the mundane mainstream

a big thrift shop mirror leaning not hung, more to one side than centered and overlapped with a smaller leaning piece of art or framed photograph, 3 or 5 clean chunky votives in a row and you're done.