Ta-dah! Old bar completely gone, new base cabinet in, new countertop on, and the only remnant of the old bar, the sink, is re-installed and functional! It took 3 (or maybe 4) trips to the hardware store, 2 different saws, a couple of close calls, and a healthy dose of blood & sweat (no tears! celebrate!).
I still need to paint one side and some touch ups, finish the countertop ends, decide on hardware, and figure out the flooring situation, but the immediate concerns have been met, the main tasks are done and the room is ready for some playing!
The playhouse is assembled and ready for business! So far The Cupcake loves opening and closing the door & shutters, as well as ringing the doorbell, but she is just as interested (if not more) in all of the other non-toy things she can scavenge in the basement. So I guess we have some more Cupcake-proofing to do before it will really be an effective play area, but it's getting close. I set up some shelves and brought down some toys, and we spent a few hours telling her "no-no" and prying unintended items out of her hands (seriously, what is the allure of paper towels?).
All in all, it is a much more useful space - the new "bar" can still be used as a prep area, if we ever do sell the house we'll probably stage it as a wine bar with bottle racks & maybe a wine fridge to one side, storage below for glasses, etc. There is no real need for seating in that area, since most people would just gather around the TV. It could be used as a serving area or buffet too. As much as I complained about the terrible paint job, and the few other mishaps we had in assembly, the overall finished project looks better than I would have thought it could have - especially considering my lack of attention span, money, and skill in all areas required to pull this off! :) Thanks to everyone who helped out. We had no idea what we were getting into, but we've really opened up the whole lower level with this project (and the accompanying laundry room clean out) and it feels great! Can't wait to enjoy some play time with TC now!