Almost burned my weekend house down like that when i was young. Wooden house, full oak wood, with setup similar to this. Chimney was not going straight up but bit up and than into the wall (and that short length was almost our downfall) and than up on another side. It was in the middle of the winter, snow falling outside, and we came there after night out and no one was in for more than a month so inside was very cold too. We fired it up, filled it up with wood and fell asleep.
Close to morning my friend woke me up coughing (it was lucky for us that he was breathing trough his mouth and not nose so smoke irritated his throat).
Long story short, chimney got so hot that it heated up wooden wall around it so hard that wood turned into....don't know....like red hot coal. Luck was that we had plaster on the walls which prevented oxygen coming inside the wall so no open fire started. That wall was like red hot coal which released ton of smoke. We ran out, called firefighters who lucky for us came fast, prepared whole thing, broke of plaster from one side of the wall and sprayed it with foam never letting open fire ignite so house was saved and basically nothing major happened. Whole house was full of smoke, some things were destroyed and wall had to be rebuilt.
Looks as cool as hell but it can be dangerous if not properly build like in our case.