"I know some drywall damage can be repaired before painting, but how much damage?"

The entire wall can be skim coated to make it uniform.

" Is there a point where you just have to cut your losses and put up new drywall?"

That depends on your skill, or what you are willing to pay for.
Skimming the whole wall should still be less than replacing it unless it is a very large area.

"Can anyone share a technique to minimize the damage? This is a nightmare. "

There is not a lot that can be done at this point.
Putting wallpaper up without a coat of primer on new drywall lets the wallpaper paste bond very tightly to the drywall surface. You can try a wallpaper steamer since the hot stem will soften the glue better than just water.

Thanks, I will try a steamer. This is a hallway, so it's not too large.

I guess I'll talk to my GC - we are starting a large renovation (2 bathrooms and kitchen/family room) and I was working on the hallway, just to freshen it up - you know how working on some parts of your house always seems to lead to other projects. We are doing some things ourselves and paying for other things. We hate to drywall so we are paying for that in other rooms, maybe I can tack skimming the hallway onto the big list of items already being done.

"...maybe I can tack skimming the hallway onto the big list of items already being done."

If you can get it done at the same time as other drywall finishing you may get a better price.
The drywall person will already be there.

You could remove the old drywall and put up the new yourself. Then hire out for the taping (added to other work being done). This would keep your cost down yet give you a nice finished product.

While you have the old drywall off, you can easily add electrical outlets if needed. Generally, I always find them to be needed.

"If you can get it done at the same time as other drywall finishing you may get a better price.
The drywall person will already be there."

That's what I was hoping.

drywall diy guy - that's also not a bad idea - we hate drywalling, but it can't be worse than what I am dealing with now.

I'm probably going to take a look at the budget and see if I can pay for some part of it to be done. the thing is we just started and I probably shouldn't be adding already - I know there will be other surprises.

Thanks for your ideas. I love this forum - I have been lurking out here all through my planning phase. This is my first post and I really enjoy getting the thoughts of others.

Sandy