K, I know what you are going through! We inherited a 1907 Model Beach house. After we started tearing 60's paneling off the walls, we were left with pieces of plaster (painted pink, green, blue, yellow) and lathe strips where the plaster fell off. We decided not to re-plaster, but to go with drywall. Because of the age of the structural lumber (rough hewn 2x4's, and I do mean rough) we are left with an extremely uneven front line for attaching the drywall. I don't think levels had been invented yet! In retrospect, I believe we would have been better off to leave those lathe strips and re-plaster! A good plasterer can level the wall as he goes. In our case the plaster would vary from 1/2" to 3/4" thick on one straight(?) wall. Yes, it's a good old house with lots of character. They truly don't make 'em like this anymore.
I try to look at the bright side (when I can find it) now that we are down to bare studs, it's going to be easy to update that old knob and tube wiring and add some firestops between the studs. Anybody in the market for porcelain knobs and tubes for electrical wiring?