around a brick fireplace one thing I’ve seen that has a nice look (kind of medeteranian), is stucco. You’ll just want to check with your land lord before doing anything that won’t just come off. Stucco is pretty easy, just make sure you don’t go for only the top coat, you’ll need to make sure you have your wood paneling good and roughed up before you do a base coat. Stucco is pretty easy to put up, but it can be messy. As far as roughing the wall up, a wire wheel in a drill works pretty well on wood paneling, but the cleanup isn’t overly fun.
Maybe you want to consider just removing the paneling. Sometimes wood paneling is just nailed up to regular wallboard. If that was the case, then you’d could take it down and then have bare walls. Those walls would need to be sealed with something before you applied paint or wallpaper, but you’d have fresh, updated wall area.
Of course, you’d need to check with your landlord if this would be okay. S/He might be glad to have that old dated dark wall paneling removed.