Mongo, Thank you so much for your detailed reply, I really appreciate your time. We're thinking of DIY-ing at least some of this, we've tiled before and these are fairly small rooms. I have a few more questions if you would have time to answer: -- Do we staple the tar paper and screw on the cement board right down to the flange in the wet areas, or is there a certain distance above the flange in which we should avoid using staples/screws? Just concerned about the holes this will make thru our underlayer. -- Can we just put the cement backer board for the wet areas all over the bathroom? Would this be simpler and give more waterproofing over the whole bathroom (my small kids will use this room and they splash a lot!). Does this cost more than the drywall, is this the reason for using drywall in the dry areas? -- In the bathroom with the tub, the existing tile is 3/4 high, and above it is just painted. The paint shows some mold/mildew. The house inspector used an infra-red camera that is supposed to detect moisture in walls and could not find any behind this wall, so he thought it is just surface mold (probably from lack of venting). Its mainly this mold that is making us think we need to gut this bathroom. The tile itself looks in fairly good shape. Is there some "remedy" we can use to clear the mold and could we then tile over this area to the ceiling? Or do you think we are best to go with our original plan to gut and tile new? trying to save $$ but not at the cost of a bigger fix later on. -- A plumber will come in and check/upgrade/move sink plumbing for us when the rooms are down to the studs. Electrician is coming in as well. neither room is vented at the moment (only windows, but I doubt they ever opened them), so we will be adding proper vent fans that vent to the outside. Thank you.

Just one side note, it was mostly DIY- all of the plumbing and tub installation was done by a plumber. And the plaster walls were resurfaced by a professional. They were pretty bad after removing the tile. And my husband wanted plaster not Sheetrock.

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.

Oh goodness Susan.. If I had to choose between the monkey paper and that stuff that was under it... I can understand why the folks papered monkeys over the old stuff. The old paper is a bit prettier, and I could see it maybe in a different bathroom or other... . but wow that must have been rather harsh with the brown tile edging the white tiles. Even when new. I bet once you get the glass door out and those cleaned up walls primered in white again and can breathe for a minute.. you still might think twice about those brown tiles amongst the much fresher and open palette. Have some fun for a week or few with putting up a new window treatment and shower curtain, trying out some paint samples. And out of curiosity.. on the right side of your OP it looks like a section of mirror extends from the medicine cabinet to the corner... have you started cleaning off the walls there yet? Does the wallpaper continue on behind the mirror or not? All of the color replacements folks have so kindly provided eliminate the mirror there.