You will save a ton of money by reconditioning the walls instead of drywalling over the existing walls, or tearing out the plaster, and installing new 5/8th drywall…Redrywalling will cost you 90% more money and about 50 % more time.
Get a good palm sander (Dewault or comparable). Purchase 60, 80, 120 grit sand paper, a basic 6" scraper, a bag of durabond plaster (90 minute drying compound). Also purchase two plaster knives, one 10" and the other 12".
Also grab the self sticking mesh tape for covering cracks. Finally grab a mud pan and a dust mask.
Scrape the walls with the scraper until any loose, chipping or protruding plaster and paint is removed.
Sand the walls using the rough grit(60) paper until all rough edges are relatively smooth.
Apply the mesh tape over any cracks in the wall
Mix up a small amount of the joint compound, and using your 10" knife apply a smooth coat over the cracked or chipped areas on the walls.
Allow the (mud) compound to dry for a few hours (keep the room well heated so that the plaster will dry fast).
After the compound has dried sand the walls twice once with the 80 grit…(after this first sanding rub your hand across the wall to feel for rough patches, or protrusions remaining…)
If the wall feels relatively smooth, sand again with the fine sand paper (120 grit).
This should do it…
Practice in one room until you feel comfortable that you have enough practice to do the entire job.
Many people believe that you must use the same materials that the original plasterer uses to restore plastered walls…However, any professional plasterer will probably tell you that the above method will work just as well if not better than using other materials and procedures.