Fireplaces 160 years ago were not used to fill the entire fireplace with large logs and flames to fill the chamber. The fireplace was a cooking appliance primarily with a 1 foot by 1-1/2 foot maximum fire reduced to coals for cooking. The fireplace was wide to accomodate the pot supports from one side to the other and/or a swing-arm arrangement for the pots. If the fire is kept to that size, repair of the flue with a liner and rammed fill will make a good flue. A tight damper is a plus and a slate slab cover raised above the top to protect from direct rain into the flue.
A fireplace is at best a decorative plus to a house, not a serious heating appliance; so leaving the fireplace the same size and adding imitation or functioning pots and holders can be asthetically pleasing.
While it is possible to put a Franklin stove inside the fireplace, I prefer to pressure wash and clean the fireplace to bring out the stone appearance and use it for the pleasing look it has.
Heat the house with a modern appliance after insulating as much as possible.