I have plaster coved ceilings, and the previous owner of the house put wallpaper up to cover some cracks and chipping. The cove has a quarter inch lip on the ceiling and wall. I know the easiest thing to do is to put sheetrock up over the plaster, but that will mess up the lip. I am affraid that if I try to remove the plaster I will damage the cove. Does anyone have any suggestions or alternatives that I haven't thought of?

 

If the wall/ceiling is coved plaster the walls must also be plaster. Remove the wall paper, fix the walls. There must be hundreds of posts here about repairing plaster.

But first: Is this plaster over wood lath? Gypsum lath? Metal lath? (doubtful but the cove could be).

How bad is the chipping and cracking?

Is the plaster still bonded and sound? If so it is an easy fix.

But you might try this, a post I made a while back on the issue of cracks:

"You want to know what to do. This is what I think I would do if it were mine. Google NuWall or some permutation of that name and you should find a system that uses some sort of high powered paint into which is embedded a fiberglass scrim. This is a mat not woven fiberglass. Now you could use that system but what you really want is that kind of mesh without the high powered paint. This is the same kind of mat that is on the surfaces of Dense Armor Plus drywall.
Use a setting type of joint compound and spread on a strip as wide as the mat going across the room either the length or width whichever you think you can handle before the mud sets and embed that mat into the mud and pull it as tight as you can. When you get the whole room done this way then skim it again with all purpose mud and skim it again if you think it needs it then sand and texture and paint or sand. touch up sand prime and paint if you want it smooth."