Thanks for the additional pictures - that helps a lot.
I have to admit my first thought when you said "the bookshelves are the wall; removing them would be a big job" was "hey that means they would both come out at the same time"... but I'll hold that thought.
Alternative suggestion - put the speakers on sliding shelves from your local big box store that you can pull out a few inches for best sound and push back the rest of the time... at least for the M22's.
Other random thoughts:
- your ceiling is maybe half cathedral, half flat - not 100% sure but I think that is a Good Thing from a sound perspective
- we will all take turns reminding you that surround speakers are supposed to go at the side (maybe just a bit behind you) rather than at the back, but (a) mounting in the ideal position seems like it wouldn't be easy because of the windows, and (b) I know a lot of people with surround speakers at the back and they are quite happy with them, particularly if they are Axiom's QS speakers - I would leave them alone for now
- if you can raise the M2 up somehow so it's close to the bottom of the TV I'm sure that would help... I would probably sit it on the cardboard box the speaker came in, but you can do better than that
I don't know how much difference the curtain pleats will make in terms of diffusion but my first thought is that they have to be better than nothing. Main concern is that they will only have effect in a relatively narrow range of frequencies... the reason I suggested wooden slat blinds was that they would almost definitely diffuse a DIFFERENT range of frequencies from the curtain pleats. I was concerned about having too much absorption and not enough diffusion but the angled ceiling above the rear wall should help a bit there... I think.
EDIT - looks like pleats do help more than I expected, at least with absorption:
Absorption Coefficients Anyways, don't let us get you too worried about all the changes you have to make. The main message is that you already have good equipment and that the next round of improvements will probably come from tweaking the room a bit, possibly including sub location, and now you have a pile of ideas you can play with over time.
That is a good looking doghouse, but it looks a bit short for you (and that's a *big* dog to share it with) so agree that a bit of consideration is probably a good idea.
Last thing - in the front speaker test layout picture, I think there might be something wrong with your cat
