Walls – can drywall be apply over plaster

You can drywall over the plaster, but you'll have to do the entire wall and screw through the plaster into the lath/studs.

Alternatively, you can fix the plaster itself. The problem is, it's separated from the lath. The fix for this is to drill shallow holes into the affected area JUST DEEP ENOUGH to penetrate the plaster, not the lath. Drill the holes 4" apart in a grid pattern.

Then use a caulking gun and inject construction adhesive into each hole to create a glue layer behind the plaster between it and the lath.

Press the plaster up against the lath with a flat board, holding it ONLY UNTIL THE PLASTER STICKS. Don't leave the board there too long or the glue will grab it too. Slide the board up and down to keep it from sticking while the glue takes hold between the lath and plaster.

Allow it time to dry, then patch the holes and paint.

Here's my take on drywall vs skim vs full update.

Skimcoat

Skim coating over the plaster that is already cracking would not be a good idea. Even if you use a harder more durable mud or plaster, it will still most likely crack because of the age of your house, and the fact that your walls are already cracking (and will probably continue to do so). The other down side is the sanding mess.

I recently bought a condo that had nasty texture as well on the walls which I wanted to get rid of. I decided for the first room that I would use a heavy 60 grit paper to remove as much of the larger chunky texture as I could. I then skim coated with drywall mud to smooth out the walls. It took several coats to get perfectly smooth, and a whole lot of cleaning afterward. But, in my case, I know my drywall is sound and not cracking underneath, so I could reliable coat without having to worry about patching too much in the future.

Drywall

Using a thin drywall layer over the top may be a quicker and cheaper solution. This will eliminate the cracking issues and will give you as smooth a wall as you like, with little mess in comparison to skim coating the entire wall.

I would still use a 60 grit paper or paint scraper (if it will cut through your texture) and knock down as much of the heavy texture to allow the drywall to sit closer to the surface. This will help eliminate waviness in the wall where the texture might be outrageous (like it was in my house), and allow you to use a thinner drywall.

A possible major downside to this is electrical boxes? Maybe someone with more electrical knowledge can speak whether adding 1/2 inch thickness to a wall would cause issues with the electrical boxes being set further in? If so, again, I would sand and use 1/4 inch.

Full Update

If I was going to be living in this house for the rest of my life, I would consider a full update, especially if I was already going to be making changes to wiring.

This solution is costly, time consuming, and messsssy! But, the upside is that you can fix/update your electrical to be safer, and more suitable to modern appliances. You can also add low voltage through the house which (if you're a tech nerd like me) may be a nice plus. This will also give you perfectly smooth walls that won't crack and a feeling that your not hiding a mess in your walls.

Hope this is helpful!