Mellie, you can use a water level to mark spots that are exactly level at the 4 corners. Then you can measure up from the level marks to where you want the top of the wainscotting to be. Finally, connect the corner marks for the top of the wainscotting with a snapped chalk line. You will want to use a stud finder to find out where you will want to nail the wainscotting so mark the stud locations just above the top of the line and these marks will be covered with the molding that you will put on top of the wainscotting.
A water level is just clear plastic tubing with water colored with food coloring in it. You will want to buy about 10 more feet of tubing than the longest diagonal of your room. Fill the tubing with the colored water using a funnel in the bathtub. You will need an assistant for this and the measuring. Fill the tube up to about 4 feet from the ends then carry it to the room you want to measure. Water always seeks itsown level so the level of the water will always be equal on both ends of the tubing as long as all the tubing is below this. Mark the height of the water at all 4 corners. Again, this height does not matter since you can mark up from these marks to find where you want the top of the wainscotting.
This really sounds worse than it is because it is kind of hard to describe but it is real easy to do.