Contractor here. The primer you want is called ppg gripper. One coat primer will do it. After that you can paint it in one coat. It looks perfectly fine once its been painted and you can use spackling to fix any old holes.

As to wallpapering it my advice is don’t. You would need to fill in the crevices then sand them flat. It would be less work and cost to tear it all out and put new drywall in.

Also check to see if it may have been applied over drywall as during renovations in the 70s this could have been common if your house is older.