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Molding frame detail example

Hello AT, I have a painting dilemma for which I need solutions. My bedroom is an attic space comprised of two areas: a sitting/lounge area and a raised sleeping area. I would like to paint each area a different color (Benjamin Moore Majestic Blue for the sleeping area and Behr Chivalry Copper for the lounge area) but there is not a defined transition from one area to the next, especially on the ceiling...

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The overall look for the sleeping area is sort of glam (similar to Matt's water-themed hotel suite on Top Design with mirrored and acrylic accessories and white trim). My questions are as follows:

1 - What would be a good way to transition from one color to another?

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2 - I would like to add some architectural detail with moulding box frames (not sure of the proper term for this but i've attached an example) to the sleeping area. Would this be odd on slanted walls? Should I paint them the same color as the walls or go for a contrasting color?

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3 - The wall behind the bed contains niches with lighting. I'm thinking of painting that area high gloss white so as not to have an abundance of blue. Am i crazy for this?

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Pictures are attached and more photos can be found at http://s164.photobucket.com/albums/u4/latenitemix/bedroom/
Please excuse the mess but everything I had in storage is currently in my room.

Thanks in advance! Tia

Anyone??