Replacing Tile in 1958 Plaster Bathroom

My '58 bathroom has tile on the floors that turns and goes halfway up the walls. The walls beyond the tile are plaster. Using a chisel I removed a soap dish, and now I'm left with a hole in the tile that I need to repair. The space will fit a new tile perfectly, but the wall looks pretty rough. There are bits of brown paper (some of it torn away from where I pulled the soap dish off) and rough wall material that is also torn up from removing the soap dish (I'm not sure if it's plaster or cement.)

See photos here - https://picasaweb.google.com/slkenne...eat=directlink

Should I just use some sort of mud/joint compound to set a new tile in place, or is there something else I need to do?

Thank!

 

How solid is the backing? It looks more like drywall than plaster though it should be plaster over gypsum lath in that era. Use thinset tile mortar and butter the back side of the tile but leave a dip in the center of where you butter it. Make the pile of mud thick enough that you think you can push it flush with the existing. The reason for the depression in the buttered back is so the excess mud has a place to spread so you can push it in flush. If you find you have way too much mud then pull the tile out and scrape the mud off and start over. If you have too little and the tile ends up shallow then pull it off and scrape off the mud and start over using more mud. You should get it right the second time. Just leave a place for the mud to spread so the tile can be make flush. Then when the mud has set grout the joint.