I agree with everyone that you can do what you want with your house. Also, it's much better to use the existing master bedroom than to knock out a wall. Not only would that project be expensive, but if you reduce the number of potential bedrooms in the house you make it lose value when it's time to sell. This is a consideration even if you have no intention of selling it, ever. You never know what might come up, and if someone is inheriting the house someday, that also might mean something to you.
I'm a little bugged about you sleeping on a couch. If it's because the TV puts you to sleep, maybe you can put the TV wherever the best bed is going to be, and that will be your new master bedroom. You don't want to wind up with back trouble that would interfere with your quilting! You shouldn't have to sacrifice a comfortable bedroom to get the sewing area the way you want it. You'll love your house when you make it suited to you, with no regard for what anyone else thinks goes where.
Another idea, if you wanted to use the living room, might be to get a door (or French doors) put in between it and whatever is next to it. We did that to keep our pets out of the living room. It's the one room in the house where guests can sit down without getting covered with hair.