If I was staring up at that, that's exactly what I would do. Make sure they're flat (shim as necessary) and "rock and roll" and you're done. Make sure the furring is attached well when you're checking it, since drywall is heavier than block tile. Now'd also be a good time to add any electrical fixtures up there, punching through the plaster and fishing over to the walls. I'm always less disinclined to "rock" over plaster ceilings than I am plaster walls, because 1) there is virtually no aggravation from trim and window retrofitting, 2) nobody touches it anyway, so the superior feel of a plaster surface is less valuable up there and 3) gravity makes restoring plaster on ceilings much more problematic, especially if it has separated from the lath in places. Obviously, you folks are less enamored with plaster walls than I am, but even so, no use making more work, mess and landfill material for yourself just for an inch or two of headroom. If there is a floor above, the extra layer will also add some sound insulation.

"Be aware that the demolition will release lots of lead paint into the air. Take appropriate precautions." Most lead paint is gloss paint, not normally used on walls but occasionally in kitchens and closets. Most of the lead paint will remain firmly attached to whatever it was on, not end up in the air. It is paint, not powder. If you must demo plaster wakks try and take the largest pieces you can handle from stud to stud, lath and all. Larger pieces mean less dust and less cleanup compared to breaking it all up (though this seems to be popular on the DIY TV shows. Cover the floor with thick plastic (the stuff in rolls) taped down at the edges (2 inch blue painter's tape), then place canvas drop clothes on the plastic to limit tears and improve footing. For very large jobs I have even been known to anchor the drop cloth with battens nailed at the very edge of the floor (if you pull the baseboard and any quarter round the nails go into the sub-floor outside the finished floor area). Shimming studs meant for plaster work is a real PITA. It is easier to sister 2x2s to the sides of the stud just proud of the face and create a new plane for the drywall. A laser level projecting a vertical fan beam can be set up a few feet from the wall, and a length of wood marked with the desired spacing from the beam to the face of the studs. Rip 2x4s in half to get ~2x2s. Attach at top at correct spacing, then plumb with laser beam and attach at the bottom. You need to use screws or a nail gun or the hammering tends to throw things out of plumb. Go back and attach the sister every foot with nails. Repeat as required. You can divide the sister into pieces as needed to get around obstructions like electric boxes on the side of the stud, fire stops, etc.

Yippee it worked. My thread is back. I had to go into my computer's history to find this thread. I had posted to it last week or so and it never re-appeared on the GW forum. Update: I fixed the large hole with plastic screen type lath, fastened up into the plaster with drywall screws. I couldn't reach one edge so I wedged in a 1x.5" piece of wood lath at one end and overlayed the plastic lath, and I think the screws are pegging the plastic screening in place :) There was a lot of technique getting that piece of plastic screening up there! Then I took Easysand 20 and filled the screening, it was ugly: After it dried for several days I took my "California Patch" and slathered a bunch more Easysand 20 on it and wedged it in place. It stayed! It is drying now. As I was trimming away some of the extra Easysand I inadvertently scrapped away some of the sheetrock paper, not the full thickness though. It will need to be gone over with another thin coat of mud, either Easysand or my pre mixed green lidded joint compound. It will need to dry for a long time: I took that Easysand 20 and filled the gap along the entire ceiling periphery. After several hours, I took my 5-in-1 tool and shaved it flush with the existing plaster ceiling and made sure everything looked square. The product was still damp and easily shaved. When all of this dries I will tape up the corners and ceiling junctions using the green lid premix joint compound and a webbed, creased, tape I found. It was sort of expensive, but I only have right angles on this job and I figured it would help make the angles cleaner. Thanks for everyones input. It was very helpful. Now I just hope this works out ok as I have some thick layers up there.

You say that the drywall is breaking down. It normally won't break down unless it has gotten damp or wet. I think before you cover anything up you should determine if there is a problem. If there is correct if first. The plaster loosening up is fairly common. It could be for a number of reason, but I think you should still be sure that there isn't moisture problem there too. As far as covering the existing walls without removing the old stuff.....I have personlly covered I would guess 40 or 50 rooms and ceilings over the years without tearing out the old stuff. Is there insulation in the walls and will you ever need it there? Celulose can be blown in from the inside and, of course, that would be done first. If the walls aren't in too bad of shape I go over everything with 3/8" drywall and use lots of screws. Where you are going over plaster and lathe you will sometimes hit studs, but often just the lathe. The screws into the lathe will hold as long as you use lots of screws. Over the drywall you will have to locate and hit the studs with screws. Also on going over the drywall, you will have to end the pieces over a stud just as if you were applying it to bare studded walls. If you end it between studs there will be nothing to hold the edges and the job will be ruined. When I go over existing walls I make sure that any wiring that might be needed is done first. If necessary I make holes to run wire. If there are any real uneven spots on the wall I shim out the low spots with scrap pieces of 1/4" or 1/8" luan or paneling. I don't remove the door and window casings or the baseboards. I run the drywall right up against the casing and fill in any gaps with mud when I am taping. Now a lot of remodelers won't agree with going ovre the existing, but I've never had a problem as long as I've used plenty of screws that are long enough to penetrate the drywall or the plaster. If the walls or ceilings are terribly uneven you might have to use 1/2", but I've always used 3/8".