Hey 70's, If you are on the east coast, you might look into blue board and skim coating for a smooth surface. Mighty anvil mentions it often and when i was working on cape cod, saw it and it is awesome. The blue board hangs the same as drywall, but the finish differs with the final coat being a skim coat of the entire surface. A good finisher makes it smooth as glass.
If you go w/ drywall, it can be finished smooth but is way more difficult even for the best finisher. After your third and fourth coat, you can size the entire surface similar to a skim coat only you are completely wiping it down before ti dries. What this does is seals the pores on the paper of the drywall which lessens the chance of seeing the seams/ fastener spotting when you paint Use a topping compound for the last coats and sizing. It's all about the mix and you only want to slightly thin the mud and try to feather in and be as smooth as possible cutting down on the sanding. Your final sanding is best done w/ 220 or finer wet or dry paper and touch ups are critical. Keep it light, go slow and with patience, and you can get a smooth surface for painting. Best of luck!
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