It depends what your definition of wainscotting is. Do you mean a chair rail, or tongue and groove pine paneling?
Either way, it should not chop up your room. If you have a 10 foot ceiling, and you are doing a chair rail, you could really add to your room arcitecturally by putting it 3.5 ft up from the floor(not baseboard), or dropping it 2.5 ft from the ceiling.(My favorite for older homes!)
If you are doing the tongue and groove you should keep it lower in the room (3-4 feet) and make sure to finish it off on the top with a decorative chair rail.