is that filling the gaps between the panel or other depressions are a problem waiting to happen. You CAN paint the panels but I do not think that you should. It’s not that difficult to install new drywall, particularly since you don’t have to do the ceiling. Granted, it will be messy until the job is done.
One other thought is that it’s easy to patch drywall. Repairing holes in paneling seamlessly is about impossible.
Henry in MI