DB, our house is about the same age as yours, and the original windows were divided like that. When we put replacements in in 2007, we opted for divided double-pane replacements, like the internal grids that 7rider described. From the street, they look just like the originals, except the dividers are between the 2 big panes of glass. Makes for easy cleaning, while still looking appropriate for the age of the house. And I don't need to paint windows ever again- YAY!
Also, re: the tax credit: If this year's is anything like 2007's was, you will need a bill that separates the materials and labor. The contractor can't lump them together in one line item. Just something to double check.



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