S.K.
Hi R.,
Just to clarify, is this that cruddy old 1970's paneling that so many people used to cover crumbling plaster, or is it the original wainscoting (which in some more elaborate homes could be floor to ceiling)? If it is the former, use the Kilz--it works great! If it is original, it would be well worth the effort to refinish it.
My dh and I have fully restored two turn-of-the-century homes and are halfway through our third. It is a ton of work, but the results are so worth it! Anyway, I agree with the others, Kilz works great, I have used it many times.
Good luck with the restoration and let me know if anything else comes up. These old houses are full of surprises, some good, some not so good. If you are refinishing hardwood floors, I highly recommend Renew Hardwood Floors. Jeff runs it and Jose did our floors--he was the best!
S.