Smooth. But I am assuming you feel you are not able to give a smooth finish DIY? We did our kitchen ceiling, and though I did end up having to go to a massage therapist (stiff neck), LOL, would do the bathroom that way again for sure! (much smaller area, and so much easier to wipe clean!)

What do you mean by roughly finished? Were the seams not taped and mudded correctly or is the finished texture a problem? Have you considered having a better finish done on the ceiling and just painting it?

I'm definitely not an expert, but we did just remodel a 1928 bathroom. Our ceiling and walls were pretty wonky. I am guessing if your ceiling is off, places in the walls are off - it's probably not even consistent on one wall! I don't feel like it was from settling (our house is brick) but more like the nuances of plaster. Because we had to live in this bathroom and were DIY, gutting it was not an option, however we both agree that would have been the best choice. It would have helped with electric, plumbing, setting the tiles easier, etc... We elected to do Durabond to smooth out the surfaces where we could. The walls weren't sanded down very far - just to get the paint to scuff. Any plaster that wasn't sound did break off from the vibration, and that meant that the area truly needed to be repaired a little more deeply.

Tile to ceiling only if you want to spend a lot more money. Not just materials but labor costs at a premium because a scaffold will have to be involved. A lot of trips up and down a ladder to the scaffold with heavy material (thin set, grout, buckets of water to clean up the grout) and trips to the tile saw. Premium rate charge for that because it will slow down the work plus wear & tear on the tile-setter. Plus hauling in a scaffold, setting it up, taking it down, hauling it away. No need to avoid paint above tile. Proper prep, primer & paint will yield a good result. I suspect the peeling paint in the other bathroom was a case of improper prep. Since this is an old house, very likely someone came along and painted over a glossy oil-based paint with water base paint and omitted the bonding primer.