I will disagree that the seam will be obvious. Not if the pattern is matched properly. Moreover, the curtain will be large enough to have some gentle folds in it so the seam won't be noticeable. The other alternative is to do a double shower rod. The outer one is for the decorative curtain which can be smaller than a regular shower curtain and hangs there to add color and hide the plumbing and the waterproof curtain. The inner rod is for a waterproof curtain (white, clear, whatever) which slides the length of the tub for when in use. Mom did that in her bathroom where the fabric she loved was a remnant and didn't have enough to do the whole shower curtain. By doing so, you aren't limited to shower curtains, but can either make your own panel or buy any drapery panel you want of an appropriate length. In this example, they used the decorative fabric on either side with a pullback, but note the other rod underneath for the waterproof curtain. Here, the panels hang straight. Here is an example of a panel on just one side. Note the outer rod doesn't even reach the length of the tub.

I'm not a designer or anything, but I personally think it's adorable. For resale, you might find out that you have a lot of other little projects to do around the house, so maybe put this one lower down in the priority list. If re-grouting is needed, do that. Then for resale, make sure it's super clean, buy new bathmats, fluffy white towels, and hang a pretty shower curtain, maybe a white one with some style to it like tassels at the bottom or a subtle tone-on-tone white, or pick up on one color other than white in the room. Adding some wall art above the towel bar and toilet would be nice too. Editting to add: If you want to do something related to the tile, I think it's less expensive to change the floor tile rather than the tub/shower surround because you don't have to re-do the waterproofing. You could install a calmer floor tile that looks good with the current peach and blue. The shower looks cute IMO, and it will be covered up or framed with a shower curtain anyway.

I'm actually also renovating a dated bathroom myself, although mine is a mauve pink and I have no choice but to remove the bath and the sink because of the tininess of the way they were built back then and because I need a walk-in shower for health reasons. So I've been doing my research. Keep in mind with my advice, I'm using a contractor. Does the floor need to be removed or do you just not like it? Because if you don't need to remove it you can just put a new floor over it which will save a ton of time and money, especially since this is one of those jobs that unless you have experience doing you're much better off going with a professional because you could damage the floor underneath. Also, if the floor is already damaged underneath it won't be an issue if you don't remove the current flooring and a professional will be able to recognize it. I'm managing to not remove my floor and it's saving me about $3000. I haven't decided whether or not to put a new floor over the old one, but if I do it will probably be with removable tiles because they are just that, removable. They are cheap, and easy to install and remove, so if I ever decide I want to mix things up in my bathroom I can always just pull them up and redo the floor. Also, they won't damage the original tile, which is in good condition, so if I ever want to sell I can pull them up then as well. If you need to replace the floor, or don't want to go with the removable tiles then there are tons of options you can go with that are inexpensive, some of which are also easy to self-install. I really liked the idea above of the black and white checkerboard floor; you're not going to get your bathroom to not have a vintage vibe, you should embrace it and play it up. I'd keep the tile as is. I don't love the blue line, but it's too difficult to remove and replace just that line and too expensive to replace all of it just for that. Live with it with the rest of the changes and see how you feel, you can always redo the tile later. I'd also keep the vanity, but I'd sand and repaint the bottom. Keep it white, but go with one with a warmer undertone, like Clare's Whipped or Timeless. I'd paint the trim and the windowsills black to go with the floor, put in some wainscotting in the same white to about 4 feet and above that I'd go with removable wallpaper with a matching blue background with a floral or nature-based pattern(removable for the same reason as the floor, but if you find one you really like you can have it done permanently). Have it be something that pays homage to the 50s and 60s. See if you can get samples of a few different ones and stick them on the walls before you renovate to see what you like. IF YOU TAKE ONE PIECE OF ADVICE TAKE THIS ONE: Change your medicine cabinets (ditch them for mirror if you have enough space), change your faucets, change your cabinet hardware, change your window dressings (or get frosted glass windows and ditch the window dressings), change your light fixtures (and check to make sure they shine on your face properly to shave and put on makeup). I cannot impress upon you how much of a difference these little things make. Do these things first and then see what you can live with.

The wall tile is going have to be removed around the bottom perimeter and up to an area where there is no longer any evidence of water damage at least. It's possible that you could salvage a lot of the tile by careful removal and if you don't want to spend the money having someone else do this slow task, you could do it yourself in preparation for the contractor. My parents had to do this in a bathroom with a leaking shower and unfortunately had to replace some of the tile, they wove in a coordinating tile because believe it or not they could not find a white tile that matched in exactly the same size at that time. That repair was done 40 years ago and when the house was sold it was still intact.