Visited the Island Room for dinner last year, it is an upscale, fine dining experience. Food was very good, wait staff very helpful, we enjoyed our meal very much. Probably would return there again, however, my husband and I are more of the casual persuasion and tend to eat more meals out at lunch while in places like Cedar Key - then spend time at night sitting on balconies looking at the nice water views, or walking around town. Will give them another 'whirl' next time we visit the Island for a longer period of time than our most recent visit.
For a scenic view you must be there before dark, and perhaps watch the sunset.