It's still wallpaper and some folks are going to baulk at it, espeically those that have been thru wallpaper removal woes before.

I'd be more incline to do the work and then do a faux finish. Nothing too outrageous. Stick to tone on tone. You will do better for resale and if it's done right it will hide your imprefections just fine.

Amy, I have painted wallpaper that has been stripped as much as possible and spackled at the edges, sanded and you cannot tell it from sheetrock, no one can, even my anal retentive son who declared he would not paint over wallpaper, remarking "See how much better it looks, Mother, since you stripped the wallpaper off." I still have not told him that we did not strip the wallpaper off. That was 5 years ago.

I used a paintable wallpaper that matched the texture in the rest of the house. I actually used it to cover a mirror in the dining room. My kids have yet to figure out where I put that mirror.
I've also painted over wallpaper, but if you already have drywall damage it would be easier to wallpaper over it. I bought mine at Lowes, and it went up very quick and easy.

LOL Daisyadair - hiding your wall mirror behind wallpaper - that's clever.

Amy, I'm sorry you're having problems removing the wallpaper - it's a real pain in the butt. Was it glued directly over the drywall? I had that problem in one house and ended up removing the wallpaper and having to skim coat all the walls - it wasn't that hard to do once I got started. I wanted to stangle whoever hung that paper.

Sky

Sky, I am not totally sure. It looks like there was some kind of primer on the walls, but it is thin and now peeling in many places. Hideous.

I started spackling the better of the two rooms this afternoon. I don't even want to think about skim coating all the walls. I have a ton of things I want to do to get the house ready to list and I have to consider bang for the buck vs. time spent on all these little projects.

I think I will try to paint the first bathroom and do the paintable wallpaper in the really bad one.

Funny what you guys have pulled off with wallpaper! I paid the big bucks to have a wall of mirrors taken out of our DR. Silly me...

Carol, I love your suggestion, but I am not inclined to learn to do faux finishes right about now either. How's the weather up there? It's warm and sunny down here and the bathrooms are right next to the pool. KWIM? ;-)

I saw a paintable wallpaper that looked just like beadboard on the web or tv. That might be a perfect solution for bathroom walls -- just add a chair rail and it's a very popular look. You might want to snoop around for some of that.

Beadboard is another option. If you buy panelling by the sheet you can ask them to either cut off 1/3 (for walls that go 2/3 of the way up) or cut your panels in thirds. Then when you get home you only have to cut for width and for electrical outlets (a jigsaw and a drill are needed for that). Your height is already perfectly cut for you.

Faux finishing can be very easy if you know what you're doing. Many people paint one color and then dab over with another and that usually looks bad. The way to do it is to dip one end of a sponge in one color and another end in the other color (best to use two adjacent tones on one color strip, i.e. a lighter and a darker green, tan, blue, whatever) and dab both colors on while they're wet, twisting the angle of your sponge as you go. It goes very quickly and because they're wet the colors blend nicely right on the wall. Or, you can buy one of those special paint rollers with two side-by-side rollers on one handle and a pan that is divided for the two colors. Then you just roll in all kinds of directions to get the desired effect. Frankly, I find the sponge works just fine and a large car-washing type of sponge makes it go very quickly. I just last night finished faux finishing my fireplace to look like real brick (well, it is real brick but I repainted it because I hated the color). The job went quite quickly -- the hard part was the base coat.

well I have to tell my experience. I purchased a house in Fl and some numb nut (PO) had the bright idea to put CONTACT paper on some of the walls in the house. At first I tried to take the paper down in the bathroom. I scored it, sprayed it and then wondered why it was not peeling off the wall. That is when I discovered it was contact not regular wallpaper. Well after taking it down with half the drywall I skimmed the wall and then decided my finish was not smooth enough so it had to be covered up with wallpaper. I went to Home Depot and they had a textured grasspaper wallpaper ...not too busy. Well I put it up and painted it a peach first. uggh, light green, uggh, pale lemon, ugggh then a soft white. Much as I hate white walls it was perfect. The reaction from others? "did you know you have texture on the walls?" LOL in other words it went over well. The white makes it kind of blend in and changes the feel of the white walls so much. Okay so now I was all boosted up from the reaction so I noticed that the wall paper in the bedroom is regular wallpaper with all these ugly colors in it and the bamboo was kind of raised. Looked like real cheap paper that did not match my decor AT ALL so I painted over it as well and what do you know... it was beautiful!
I don't have any pictures because I have sold the house but last year I saw the house was on the market and they had a virtual tour and when I took the tour online I saw they did not change the wallpaper at all. When I was selling the house lots of people commented that they liked the walls. The white makes the rooms look much larger and with the texture it creates "interest"
Thought I would share...hope this helps.

Here is a link that might be useful: the bedroom paper in lots of colors