You most likely will not be able to reinstall this backsplash. When tile of any kind/size is removed, there is often major damage to the tile. Why on earth would you remove the upper cabinets to do this?

Since drywall will be damaged anyway, save yourself time, and cut it out, and put in a new piece of drywall, and tape and mud it and sand and prime. I do have to agree, that the back splash cannot be reinstalled, and that it isnt a very pretty one either. Please choose another backsplash, that actually will go with your kitchen and maybe a bit lighter in color. That one is so in your face, that the rest of your kitchen, isnt what you see when you look at the picture. Sorry you have to do all this extra work. Your kitchen looks very nice. The black sink is just like the one I would like to replace mine with.

Is the short counterspash a separate piece or is the counter and splash one integrated piece? If it is separate, consider taking it off for a more updated look when you retile. Another vote to simply cut it out because there are glass tiles in it...be very careful when you demo it even if you take off the drywall...you are going to get glass shards. Look for something other than mosaic tiles for a more updated look.

"The counter splash is integrated (one piece)."

That's even better. Put a circular saw on its side and cut the splash down to 1/2" - 1" high or so and set your new tile on that after you've profiled and sanded the cut edge. The corner will stop the saw, but that little bit can be freehanded with a laminate trimmer with a straight bit.

Pull that sink and undermount it too, please. Easier to get the saw past that way.

You should definitely remove the wine from the kitchen. Wines do not like heat.

Does the gap get larger possibly because the counter isn't level but the wall cabinets are???

I would check all of that - take some vertical measurements every few inches and see if there is something else going on that is not related to a poor install...

Once thats good, then cut it all out... and have a blast!

I have removed the backsplash and partially restored the area with new drywall. I would be interested in installing another backsplash.

I would appreciate any recommendations and suggestions specific to product, material , styles and colors that would be suitable for a long time. Also, some of you suggested removing the short 1.75" countertop backsplash. How is that secured ? Can it be removed without damaging the surface ?

Eddie, you can't remove that backsplash because it is integral to the countertop. Look at how the Formica folds around the inside corner. One piece of laminate is glued to the countertop and was bent to go up the splash.

Older style laminate counter tops were two piece...a separate splash that was glued to the wall and caulked at the seam where the bottom of the splash sat on the countertop. Those are removable. Yours is not. The new style that you have is easier to keep clean as well as being leak-proof.

Get rid of the red on the walls and for backsplash tile find something simple in a cream tone, or even the light tan/beige color of the mosaic that was removed. Simple, clean lines are classic and will be "suitable for a long time" - that mosaic tile, or anything even close to it, is not.