Installing a wood heater in a fireplace

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I do appreciate all the advice I can get. I think we're going to see what it will take to get the proper chimney installed right where this one already is. I'm pretty handy, I do remodel work but have never done chimney stuff at all, so I'll leave that to someone else. I won't sleep good not knowing that it's right. We just recently moved here and neither one of us want to use the gas heat.
 
One option might be to completely remove the existing ZC fireplace + chimney and create an alcove for a freestanding wood stove there. It will almost certainly have to be a modern or narrow stove. The clearances for older stoves are high.