Be cautious about removing interior walls. Those could be structural supports. Examine your house carefully for construction details. If you are unsure if something is a supporting wall or not, engage professional help. It may not be supporting the main structure, but it could be supporting the ceiling.

I agree that the gray color darkens the room and is gloomy. A rule of thumb: In the paint store when using paint patches to select colors, find the one you like and then buy two shades lighter. Large areas such as room walls will appear darker than expected. The lighting in the store can shift the perceived shade of color.

Until you become practiced at selecting color shades, run a test. Since the house is empty, now is the time to do this. You can use a large piece of plywood or canvas on a stretcher frame. Buy a small quantity of paint you think you will use. A pint is enough to paint a 4ft x 6 ft panel. Paint the panel outside the house and when it is dry enough, move it inside and place in front of the wall you are studying. This will give you a better idea of how the finished room may appear.

When painting a room, do not make the mistake we did. We were painting the living room of our new starter house. It was nearing quitting time in the evening and we were tired, loopy, but happy. There was a little paint left in the pan, so before I cleaned the brush, I drew a 'mural' on a bare wall. It was a sletch of rolling hills, a stream and few trees. It was the same paint that we were to use the next day, so no harm done or so we thought. The next evening after working our day job, we returned to finish painting the living room. I painted over the 'mural' and when I looked at the wall at an angle, my drawing showed through in relief. There were two layers of paint where lines of the drawing was and a single layer elsewhere. Horrors! It took 3 layers of paint to fade the effect.

The lesson here is do not start painting a wall unless you can finish it. If you paint part of it one day and then continue the next day, there will be an overlap where the job was stopped the day before and that overlap will have an extra layer of paint. It will show. Also there is a danger of having a slight mismatch in shade of color.

Not sure about your choice of color scheme. Try different schemes by coloring a picture or drawing of the house and interior rooms. If you do not have drawings to copy, use a digital camera and take photos. Using your computer and printer, convert the photos to gray scale and print out to about 8 x 10 pictures. Try out various color schemes. (You can use full color photos, but it will be more difficult to color objects to your selections. Gray scale is better because the uncolored portion will not detract as much. You won't need to color the entire photo.)

For the exterior of the house, you may find that the maximum number of paint colors is 3 for best appearance and in some cases, 2 colors works the best. The amount of work required to paint the exterior increases with the number of colors. Three colors is about the practical limit.

With all due respect this house is not really a disaster, it just needs some remodeling.

My point was perhaps too subtle - that you may get more responses in the Remodeling forum or similar because people who know that stuff don't always hang out in the Disasters forum. Myself, I don't know much about how to remodel a house to this extent so I'm not holding out on you. :-D

Hire an architect