Plaster? Dry wall? What is on my walls?

My house was built in 1893. All the walls have what we assumed to painted wallpaper over plaster. However, as we've gotten deeper into some major renovations, it doesn't seem like there was ever a final skim coat of smooth plaster over the rough plaster, just paper. When the paper peeled off in places, it's all very rough underneath. When we cut into a wall to make a new door we found lathe, a very thin bit of plaster, then paper and paint. What is this? How do we deal with it? Put on a skim coat that was never there? Try to paper it? Give up and cover it with drywall?

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