Hmmm. Tough call. Any chance you can drop the plumbing down through that partition wall into a convenient spot in the basement and have the best of both worlds? That upstairs spot would be sweet if you had a peninsula tank on a tall stand and could view from both the kitchen and living room but I don't think that is what you ended up with (Marineland DD right?). Think will probably be a bit low (and one-sided) to take advantage of that. There looks to be a fair amount of natural light from that window (assuming it won't be covered) which could cause you a bit of pest algae maintenance but I wouldn't let that decide.
This kind of thing is always such a tough call. I would love to have my tank somewhere where the water issue wasn't such a big deal (concrete, other impervious surface) but I also know I would see a lot less of it if I had to go downstairs. As it is, we pass by it constantly - which adds enjoyment and also helps us keep an eye out for problems before they become too drastic. If you could possibly figure it out, I would definitely try and find a way to have the "wet works" downstairs - maybe tied to a nice frag system and specimen tanks - with just the display up top. Given your ingenuity, I am sure you can figure it out If not, maybe integrate the stand into a larger cabinet that runs the length of that wall to give yourself some extra room for equipment underneath. I find the "in stand" limitation to be really challenging (says the guy with a chiller sitting next to his tank).