This is a basic sketch showing how we imagine the stepped down living room: made of earth and earth furnishing; covered with cushions; in a round space; in the center of the house; gets cross ventilation from the kitchen and from the main entry; and gets sun from the top window in the roof.

Few useful links for the earthen part:

 Earth floor and earth plaster:

The Beauty of Mud and Straw -

http://www.greenhomebuilding.com/articles/mudandstraw.htm

Mud A Warm and Elegant Solution -

http://www.skillful-means.com/projects/mud/mud_floors.htm

Nice earth floor example (scroll down):

http://athenszencenter.org/page0008.html