Well, I don't know if this is the wisest approach, but three of the four walls in the area I'm converting is already studded and has paneling on it. I was planning on just priming and painting the paneling, building the new 4th wall the same way, then add acoustic panels at the appropriate places if needed. I was hoping to avoid the drywall dust/mess. I know there is insulation underneath the paneling, so I would think that would help with the acoustics a bit. I did this with a spare bedroom in the basement, added chair rail molding all around, and it looks pretty good (the grooves in the paneling actually added to the aesthetics.) I’m not sure how good/bad this would be for acoustics in a theater room, though.

Any thoughts on this approach?