Take it off, take it all off! You have a lava rock fireplace that's in serious need of upgrading, the good news is that the stone is relatively easy to remove. The bad news is that regardless of what you do, the process is extremely messy.

http://www.ehow.com/how_12058250_remove-lava-rock-fireplace.html

We had the same fireplace! Except that it was all black lava rock with a sandstone mantle and a two foot deep hearth. And it was built into the cement block fireplace. Taking it down would have meant tearing out the entire exterior wall and chimney. So we framed a new wall in front of it and framed out the hearth, sheetrocked the wall and front of hearth and sold the huge ugly wood stove and framed out the fireplace surround and hearth top with neutral tile and built a mantle. Success!

But if it is an interior wall then I say yes, rip the whole thing out!

How large is the wall? If it is going to be cumbersome and costly, perhaps framing the fireplace with some sort of mantle structure would help. A new screen would help as well. I kind of like the texture its just the black rocks can be overwhelming. Painting the wall in a dove grey color might work if that palette works with the rest of the room.

I would try painting it first and new screen. If still looks bad, then see about ripping out. I painted my really ugly fireplace and now it looks great!

I agree, it is ghastly - take it down, and do something really nice for the fireplace surround.