Shower – Tile Grout: Patch up gaps, or strip out grout and regrout the whole thing

I would probably use unmodified thin set to cover the gaps and give a good base for applying the tile.

Could you do something a little decorative and use a border tile around the repaired area, sort of like a picture frame? Then use a different tile to fill in the area. The border would make the change in depth harder to see.

When I used to do a lot of these for a building/renovation company, the approach our foreman recommended was to assume the drywall will need replacing anyway and just rip it out. That would let you remove that entire panel in 45 minutes, and then you can just pop a new piece of drywall in, which is another 15 minutes.

As you can see from your 45 minutes, the drywall is going to be ruined, so just bite the bullet - get in behind it and pull it all off. The use of a crow bar and hammer may help here.

If you are wanting to keep the tiles on the adjacent wall, make sure you have cut a gap in at the corner so you don't rip it out as well.

Also, make sure you have something over the drain, to avoid it becoming clogged (I know - sounds obvious, but people do forget)

Updated to incorporate comments

• Cement board and a vapour barrier are the only suitable backing for your tiles here. Drywall shouldn't have been in there to begin with.
• Watch out when hammering around plumbing, to avoid water leaks adding to your worries!