We have a Family Room on the north side of the house. It had paneling on all the walls too. Fortunately, (from a cost perspective), the paneling was actually nailed to the studs. There was no drywall underneath so we simply ripped out the paneling and put up drywall, then painted it white. It's MUCH brighter now even being on the north side.
You can paint paneling. Go to one of the paint Retailers (like Sherwin-Williams, Finneren & Haley, etc.) and tell them what you want to paint. They'll help you from there. Use quality primer and paint! I don't suggest the paints in the Home Centers. (The price will tell you the quality.) For the amount of paint you'll need, spend a few extra $$$ and get good primer and paint.
You can possibly hang a picture where the 'hole' is, eh? (If it's open to the outside, of course, you'll have to address that first.) My best to ya and hope this helps.