I just finished painting over the paneling in my family room. The paneling was very dark and frankly quite depressing. I applied two coats of H2O based Kilz 2 and two coats of satin topcoat(off-white) and what a difference it makes. My paneling was cleaned with a mild detergent to remove surface dust/oil and lightly sanded to remove the glossy surface and help promote primer adhesion. I didn't have any problems with adhesion or covering of the dark color. If your paneling is in fairly decent condition I would recommed painting as I did, it makes a world of difference. Also, I had a few areas where there were gaps and I filled them with paintable caulk.
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