Who told you this? Whoever it was is incorrect. Knotty pine has its place, but knotty pine was installed as a matter of course back in the day, and doesn't have quite the fashionable reputation it once had. It can be painted to hide everything but the seams (with adequate primer) or color-washed to retain the feel of panelling without the darkness. If the wood were mahogany or some other valuable species, and in a historic property, it would be a different story.

I had a family room that was all wood and I hated it. HATED IT!! We did a remodel and I had it ripped off and a bay window put in and painted the room white. Even the wood beam. I can't tell you what a difference it has made and how much we love it. The room is airy and much more 'us'. The fact is that wood makes a room darker but it also is rustic and if that isn't your taste it won't feel right. Also, it wasn't good wood - some woods do seem to look better than others.

Having said that I have seen some boys room done on Pottery Barn Teens that incorporate the wood and add industrial elements with warm fabrics and they look really comfortable and exceptionally well done. Also, I have seen some photos of mountain homes ( I think here on Houzz) that have been modernized and kept the wood and it worked well. Maybe check through the site and use keywords and filters and you might get some ideas as to what you can do. But if it isn't to your style or taste I wouldn't hesitate to change it - after all you are living in the house right now and unless you are planning to move in the next couple of years I would put the re-sale thoughts to the very back of your mind.