Exterior Repair - New Window or Cladding??

dodgydl

Looking for some advice. At the front of my property I have a bathroom window which has a large-ish (approx 1.5m x 1m) piece of asbestos cement board clad underneath.
The cement board has a wooden window sill underneath which has started rotting as have the trims which hold in the board. There is peeling paint on the cement board which makes the whole front of the house look bad so I want to find a solution.

I finally got on, put on my mask and disposable suit and carefully removed the trim holding it in and removed the piece of asbestos cement board as one to reveal the underneath. It now appears that the frame underneath used to be part of a whole wooden window and that when it was changed to upvc the installers employed by the previous owner chopped the top (and replaced with a new upvc window) and left the lower part of the wooden frame including the cement board.

I would like to get opinions on what people suggest is the best option to get this fixed. I am thinking I have 2 options.

1) Put up some sort of upvc cladding
2) Do what other people on my estate have done and replace the window with a bigger window. Standard window for top half with a bottem half blank plastic panel but all one frame (not sure what the official term is)

If I clad obviously the bottom half rotton frame will need to be removed and re-battened?? With the space re-insulated. What would be the process?

How do people think I best to go about it?? I have included some photo's
Any help would be appriciated

http://s1305.photobucket.com/user/dodgydl/media/image_zps4cab1677.jpeg.html?sort=3&o=2#/user/dodgydl/media/image_zps4cab1677.jpeg.html?sort=3&o=2&_suid=137874889614307067247183391929

http://s1305.photobucket.com/user/dodgydl/media/image_zps4cab1677.jpeg.html?sort=3&o=2#/user/dodgydl/media/image4_zps2fea1fcd.jpeg.html?sort=3&o=1&_suid=137874891649608440852997431188

http://s1305.photobucket.com/user/dodgydl/media/image_zps4cab1677.jpeg.html?sort=3&o=2#/user/dodgydl/media/image5_zps8eb08072.jpeg.html?sort=3&o=0&_suid=137874892827403346413832827963

-taff

Perosnally, I like big windows, so I'd put a big window in.