Honestly, I think your living room will be fine with some planning and privacy screens, as long as your future cham has lots of space to get away and feel secure. You said that the cats only have monitored access to the room, right? If people are right there, i really don't think it'd be a concern. Heck, if the cat(s) are only in the room during specific monitored moments, just throw up a privacy screen whenever they're in the room! I think it'd be a better solution than your private room, which has unrestricted cat access, and you're right - more people would get to enjoy the enclosure. Again, pending traffic/how close the enclosure would be to people a room divider of some sort would be beneficial during peak hours/if the little guy is getting stressed.
The feeder insects have always been much more interesting to my cats (when I had them), but as long as they're kept in sturdy, uninteresting bins I've never had any issues. My cats were much more fascinated when I was keeping crickets in a glass tank but when I switched to a ventilated rubbermaid bin they completely lost interest. Neither of my cats were at all interested in the reptiles (leopard geckos, at the time), and rapidly lost interest in my various fish tanks and birds. I suppose it depends on the personality of the cat, but even my most voracious hunter who frequently brought me rodents, large insects, and occasionally birds never bothered my pets.
Not entirely sure why you've had such a response - it sounds to me like you'd do any chameleon justice with some preparation! I do agree with Brody that you ought to set up/make your future cham a nice vivarium and let it mature for awhile before you being the reptile home. That way you have time to perfect the environment and iron out any issues beforehand! I wish I could have done that. My Karma quite literally fell into my lap and I've been scrambling since!
I've been moving from house to house with as many as a dozen pets and three planted aquariums for the last ten years, though I'm currently down to three birds and my veiled chameleon. If you intend to move at some point, it may be difficult to disassemble your cage to move it depending on what you end up with, but I don't honestly think it's that much of a concern. It's totally doable with some forethought, though it may not be ideal for the animal.
I'd browse the forums, get some educational material together, and discuss with your housemates. Is it the best living situation for a chameleon? Maybe not. But many people with imperfect situations make it work with some effort and cooperation. Case in point: I'm making it work with extreme space limitations and three large bird cages in the room.
It might be better to wait for the sake of the animal, but I think you're perfectly capable of making it work. Maybe as part of your presentation to your housemates, you can bring up some of the concerns members have had regarding the suitability of your home for a chameleon. Sounds like you're a group of reasonable, intelligent individuals!
Just my two cents, for what it's worth.
~Amanda