I know someone who replaced the bathtub and surround area with a modular thing and then put wainscot over the rest of the tile. It looked okay. Their tile and tub were in terrible shape with the tub showing some of the cast iron under the enamel.

Is the bathroom in bad condition? Is the tile a really odd color? If it were me I feel like I would not want a bandaid type renovation of an older bathroom.

A lot depends on what part of the market your house will occupy when it is listed.

I bought a house that had an inexpensive redo of a bathroom to put the house on the market. I had actually seen the house before they redid the bathroom and they decided to take it off the market and redo the bathroom. Since they were doing it for resale they did the least expensive redo they could. (Mine was really bad, I am not saying you will do this). I ended up renting that house for two years and that bathroom was falling apart already by the time we moved in the house. I ended up gutting two bathrooms in that house one only two years old, one maybe 4 -5 years old, both done to put on the market, but not done very well.

My bathroom is in great shape actually, including the tub. 1950's, grey with a dusty pink bullnose and matching pink tub. I'm exploring ideas to modernize some of it, and deciding how far to go to, or what I shouldn't bother with. The market being what it is, even a house of my size (3br/1ba ranch, 90% updated, town with top notch schools) it will probably sell in a week regardless of the bathroom. I'm just doing it to make myself feel good, but I'd never recoup the cost of a full gut reno, and being the only bathroom, it's too much of a PITA for my family.

I would 100% leave that bathroom alone.

Leave it. Just finding a quality contractor to do that work will take months. The next owners will appreciate making those decisions themselves. Just make sure it's CLEAN, and if change of plane caulk needs to be replaced to enhance the "clean", do that.

If it's in great shape leave it alone. Someone coming in will appreciate the original retro tile and style.