I can't seem to figure out how to get a great picture of a tongue and groove living room that also has ceiling molding, off of one of my houzz ideabooks to show you that this style you like, can and does look good together. I picked the collaborate feature and put your user name in it to try and share this pic.

Hello There: Your home looks like it has some good bones and period features. No one has yet to comment on marrying subway tiles on lower walls, with tongue and groove cladding on upper walls of your space. I am thinking this finished look could well end up looking quite "busy." Lots of competing "grid" lines, etc. If I understand correctly, this space is actually, or ultimately will be, a bathroom. Perhaps you do not want a wood product on lower sections of the walls because of potential water damage, etc. That said, there are excellent paints, sealants, etc., that you could apply that would guard against this. If painting, using Zinsser Sealant as base coat is a good starting point. As another alternative, you could use much larger tiles on lower portion of walls, oriented vertically. I am thinking 12" x 18" (or 24") tiles. Of course, these are more challenging to install, given their greater size and therefore, weight. Despite this, if you have an excellent tiler, it can definitely be done. For example, you could choose glass tiles, either clear or coloured. Going even further, you could install glass panels to lower sections of walls. You could "back paint" them or not. You could apply paint or even wallpaper (with a wonderful design and colour way you'd likely never tire of) prior to installing glass panels. The wallpaper idea, especially if design is more curvilinear in nature, would not be competing with verticality of tongue and groove, but rather, would complement and enhance it. If beautiful wallpaper (or heck, even a mural or timeless design could be painted directly on walls) is applied and then covered with clear glass panels, the overall effect would be akin to that of an art installation. Naturally, glass panels would be considerably more expensive, but would provide a more seamless, less cluttered appearance. Should you like this idea, simply check what thickness of glass would work best, both for aesthetic and safety purposes. If you have a bit of time to shop around for best supplier and price point, you could well suss out a source that will not "break the bank!" :) To affix glass panels to the walls you want to use hardware that is anodized. As an idea, you could use anodized lug nuts that are usually used for automotive purposes. I just looked up "anodized lug nuts" and see they are available in wide array of wonderful, decorative colours. This hardware would be visibly holding your glass panels in permanent place, but they would be a small attractive design element, ultimately adding another layer of visual interest to your space. I believe glass panels would tie in very well with your great, textured/mottled glass panelled door and transom. Too, I think the overall look would achieve a really attractive marriage as various materials, along with period architectural features would "read:" old, new, and timeless. I realize this design concept may seem counterintuitive to you and/or others, but I can "see it" and think it could be just fab! All The Best, Sharon Black, interior designer and contractor

A nice whitewash wall/paint treatment would brighten it up if done in a light color. Or I would paint it but not sure if all the knots will bleed through? If so then I would use an oil base Kilz to stop bleed through and paint it depending on the interior design I want for each room. I would not paint the ceiling for a more Montana look,

Textured linen or with a subtle print wont date. Feature walls make a room smaller as they jump out ar you. Wouldnt recommend. Get some interesting art or craft. Pick up colour with accesories