ugly white brick fireplace
If its white brick you could try sponging each brick with several colors of brick colored concrete paint or stain and leaving the grout.
If its painted white then you need to paint the whole thing a grey "grout" color. Then use sand texture paint in brick colors applied each brick.
Since your doing it brick by brick you can stop and start.
Im with him. It doesnt sound like it would be worth all that work. Drywall is cheap. Rip the panelling off. Go for the clean walls.
Not sure of your layout but you may be able to forgo drywall and just skim coat with topping compound. Youd be surprized what it will cover. I just used 4 buckets to skim coat a small hall. In some spots its 1/2 inch thick. Sounds like a lot but its only $7 a bucket.
I like all the above ideas; painting, sponging, drywalling, the mantle, etc. Just an additional thought as well--possibly some decorative ceramic tile around the fireplace (obviously if it works with the whole layout).
It's a small enough quantity of tile that it needn't be very expensive. It would add a definite touch of class. And would give you some tiling experience--not a bad skill for any homeowner!
I may be doing this (before-and-after) myself in the near future, as I am tackling a kitchen remodel. The hardwood floor needs lots of work, also am having some 'propping up' done in the crawlspace....arrrgh. I'd might put the pics up on a website--but only after I know things are going 'my way'; wish me luck!
By the way, when's your move-in date?