Passengers downstairs in the cargo hold?

For starters the idea has been around for decades and it has never worked because the space is needed for passenger’s bags or very valuable cargo.
And there are major structural issue surrounding the beefing up of the belly of the aircraft to protect passengers in the event of a wheels up landing.

McDonnell Douglas, now part of Boeing, found all this out in 1991 when it proposed its downstairs Panorama Deck for the MD-11 with passengers seated for the entire flight. Certification problems plus a distinct lack of interest by airlines killed the concept.

Lockheed actually built a downstairs lounge (below) in its Tristar for one customer Pacific Southwest airlines in the early 1970s. Five were built and when PSA went bankrupt they were sold to LTU the German charter carrier.

Boeing and McDonnell Doulas also proposed downstairs lounges on their 747s and DC-10s (below) but no airlines took them up.
If the area is used just as a lounge after take-off then the certification issues are eliminated. However it is extremely costly to the airline to use the space for no revenue be it cargo or seated passengers. 

However Boeing did have a small downstairs lounge on its Stratocruiser in the 1950s.

See Boeing’s Stratocruiser here.