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Yes, many types of peel-and-stick wallpaper can be used in bathrooms, especially those made of vinyl or polyester. However, its success depends heavily on the level of moisture and ventilation. In bathrooms with good ventilation, such as those with fans, it can be a durable option. Peel-and-stick wallpaper may not adhere as well as traditional wallpaper in very humid conditions. For bathrooms that see a lot of moisture, like a kids' bathroom or a full bath with a steamy shower and poor ventilation, even high-quality peel-and-stick wallpaper is likely to peel over time.

The pros of wallpaper include its durability and longer lifespan than paint, as well as its versatility. The durability can translate to lower long-term costs for upkeep and replacement, and the versatility means you have more options for customizing rooms in your home. Some downsides include that it’s difficult to remove, it’s not ideal for rooms or areas exposed to high moisture content or sun exposure, and it’s tricky to install. A professional wallpaper hanger can help mitigate these issues, though, by installing it properly and in areas suitable for wallpaper.

Yes, you can apply peel-and-stick wallpaper over wood paneling, but it requires significant preparation for a good result. Peel-and-stick wallpaper has a weaker adhesive than traditional wallpaper and works best on smooth, non-textured surfaces like painted or primed drywall. Because wood paneling is often textured with grooves, any flaws in the underlying surface will likely be visible after application. To prepare the paneling, you must ensure the surface is free of cracks, holes, and protrusions by filling any indentations and sanding rough spots to create a smooth surface. An alternative is to remove the paneling and apply the wallpaper directly to the underlying drywall or plaster, provided it is in good condition.

If you can already see the texture of the existing wallpaper through the layer of paint, then the texture could also come through the new layer of wallpaper. If that’s the aesthetic you want, then proceed. But if you want a smoother surface, you should either strip off the existing paint and wallpaper or hang a layer of liner paper before proceeding.