Sean, Yes that will work, been there and done that on walls in basement. Figure on minimum three coats, starting with narrow knife, and using wider one each step. Also if you plan to use a texture ( sand ) paint, it will give a rough surface that tends to hide any ripples in the paneling. We went with a stucco, knock down style finish. Good Luck, BobB
You will probably want to tape over the joints in the panels, much like you would with drywall if you are going for that totally smooth look. I’d suggest the fiberglass tape rather than the paper since the panels will have some movement. Good luck.