Your vision makes so much more sense and sounds great!I think it was remodelled by the previous owner - orginally it was actually a bunglow so the master would have been on the same floor as the kitchen. If it was my home I would of used the bottom floor as my bedroom / ensuite/ walk-in wardrobes / gym / casual tv room, then groundfloor as kitchen / dining room / formal sitting room / offices on that level and left the top floor as guest room.
I mean who buys a 5 bed home and buys a 4 seated dining table!!!!! We've 4 bedrooms, 8-10 seater dining table - so that guest can come eat and stay!
Only question I have as an Aussie, what on earth is a bungalow? It sounds to me like a hut on an uncivilised island somewhere lol