The bathroom is all finished. I just got done scrubbing it down and putting everything back in. I was never able to figure out how to miter the corners properly, but I did get around the issue with these little babies:
The corner blocks allowed me to cut the molding straight and avoid the miter all together. They were very difficult to paint around though.
Here’s a picture of the whole ceiling with the blocks:
and here you can see the board and batten panels:
I’m taking everyone’s advice and getting rid of the blinds. You’re all right, there are too many lines and the molding around the window is enough to be interesting so I think I’ll take a cue from Karen Anne and hang a simple panel inside the window. There is a Dwell Studio fabric that I have had my eye on, its sort of pricy, but since I’ll only need about a yard I think I can make a go of it.
Ittybittybungalow 
Gorgeousness! What a fantastic work-around. Be sure to post your final window treatment.
Brainstorm…could you use the existing blinds as the base for one of those roman curtain thingies like you made for elsewhere and use that beautiful fabric you have in mind?
Looks great. I love the board & batten.