As you are removing the current countetops, including the 4”backsplash, you’ll most likely damage the tile backsplash. Since you are making a lot of changes, I’d replace the backsplash as well. It doesn’t seem to be a very large area to re-tile. And yes to deleting the shiplap.

Yes to replacing the backsplash and removing the shiplap. The backsplash should be something that will enhance and add to the overall upgraded feeling that you're looking for with the painted cabinets and new hardware.

If you haven't already had your granite counters templated, I suggest you move your fridge to the right to the edge of the bulkhead and replace the 12" deep cabinet above the fridge with a 24" deep cabinet. Then I would add a base cabinet and wall cabinet to the left of the fridge. You could really use the extra 9-12" of countertop.

If they have already done the template then I would add a floor to ceiling cavity to the right of the fridge.

Do the backsplash!