We got several quotes to replaster the room to get rid of the cracks and cover the peeling paint, however the amount of damage was intensive. Most of the contractors recommended we chip out all the damaged areas and start fresh, or else cover the entire room in drywall and texture it to look like plaster. Either way it was going to be about a thousand dollars and would involve us doing a large about of demo and not to mention all the dust.
We decided to go ahead and bead board the walls identical to what we did in the mud room. We felt this would keep the house consistent and allow us to have the best overall product without any demo needed. We called in the same friend/carpenter Gordon who did the mudroom to install the panelling in the space. He said it would be about the same cost as the plaster work, with no demo required.
Josh and I, worked to come up with a design for the space. We added a chair rail in the space. This was for two reason: one it broke up the expanse of space, two it allowed us to fit all the runs in with a standard 4' x 8' sheet without any awkward joints. The first day Gordon removed the ceiling fan, the lone light, wood panelling, and one of our attic hatches. In two days he had panelled most of the room. It was a huge change and we were super excited. Bye bye scary staircase.