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Lighting. Put those fluorescent tubes in the garage and get some canister lights, or lights that reflect off the wall. Put a backlight behind the TV. Cover the walls with curtains, movie theater style, for sound-deadening and for a cleaner look, and so it looks less basement-like.
A cheap way to cover the exposed joists is maybe with a canvas paint tarp...you could go with sort of a casbah motif or a army-tent motif.
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