I've had to add exterior "escape" stairs to comply in a few situations.  

This enabled people to walk from the kitchen to the back deck without having to go through the first floor bedroom.Did the same thing on the 2nd floor, so that people could walk up the spiral stairs and not have to pass through the 2nd floor bedroom.

The hole at the stairs, assuming it's interior, the same joint compound can be used to fill that hole.

Have you looked into cement?  

Other code issues such as width of stairs and hallways can become an issue if that has to be changed.

It is all surrounded and covered with gravel and the floor is re-cemented.  

Mostly depending on what finishes are selected...vinyl siding, cement board siding, brick siding?

You might cover the deck and door facing toward the vantage point of the photo or extend the deck around to both doors and cover up those stairs on the front of the house.

The end result will be a 3 bed, 2 1/2 bath cape with a master suite on the first floor and two dormered bedrooms on the second floor.We are modifying the closet under the stairs to accommodate a side by side washer and dryer, so they will be on the first floor just outside the master suite. 

I think there might be something to this idea: nice carpet in the down master (I myself prefer nice carpet to wood in bedrooms), solid bamboo floors on the first floor (sandable 3-4 times and completely waterproof and fairly hard and sustainably made) and up the stairs, vinyl tile in the laundry room and HVAC closet, and standard carpets in the two smaller rooms upstairs.