Unless people are splashing a lot of water on the walls when using the sink, or you don't have a fan in the bathroom to evacuate moisture-laden air from a shower, wallpaper is not going to be a problem. I don't understand why you would think it would move or tear.

thanks kudzu! i guess i thought that was why i see photos of bathrooms with backsplash tile or countertops that wrap up the back and side walls. to be honest, i've never paid attention to whether or not my family makes much splash around the sink. i'm assuming powder rooms tend not to get as much water splashing since most people don't use powder rooms to wash their face or brush their teeth, but this guest bathroom will be a full bath. that's good to know that you think it won't be a problem. good point about having a fan.

And, when I said splashing, I meant like ducks :-)

Normal bathroom use is not going to do anything, even if a bit of water gets on the walls. Remember that many wallpapers are washable, as yours surely is, and people routinely use a damp sponge to clean it up with no issues.

If the vanity had at least a little lip on the back of the top it would be better, but frankly I think it will be fine as long as you are careful with water when you are cleaning the vanity top.

If you're using a vinyl wallpaper which is what I think you mean, then you'll be fine.