Check to see if there is drywall behind the paneling. If not, just use a liquid sander (it's like a primer) and then prime & paint the color you want. Also use a metal paint that is heat proof to paint out the brass in front of the firebox.

I think paint (or at least whitewash) would bring a lot of light to this room while bringing it into the current century. You might consider replacing the shutters with curtains or maybe cellular blinds that can be lowered from the top for some privacy..

Also take down the shutters if you want more light in the room.

white wash, i second that. but what about removing?