I certainly didn't know about the problems with covered litter boxes. Sorry! I used to use one for my previous cat, Shrimp Boat, a long time ago, because the lab always wanted to eat what was in the box! Yuck! I kept it scooped regularly and never had a problem with her using it and she was strictly an indoor cat. Just had to keep the opening pointed towards the wall, with just enough room for Shrimp Boat to get in and out of there.
As for wall coverings, maybe a Bead Board type of wall covering, that you can paint. You can finish it off with a nice molding. A lot of people do that in bathrooms, half way up the wall. Then you can keep your wallpaper where the cats can't reach.
Let us know what you end up doing, and good luck.
Logan