Built in bookshelf project: take one

We have a huge bare wall in the family room crying out for bookshelves.. Built ins, something neat. But the wall is layered over, and paneled and painted and.. So step one: make it not look paneled. I figure the paneling is just as good as backing for the shelves, so we tackle that first, and build the shelves open backed into it- sort of wall, sort of backing. We'll see.. 

Step 1: even out the hideous grooves with primer spackle.

Step 2: orange peel/knockdown texture. 

Step 3: painting the wall

Step 4: building/staining shelves

Step 5: enjoy shelves and finally unpack our library ( Woohoo! I'm missing my genomics books..)

Wall before:

Wall with spackle layer ( now drying):

Used this lovely product recommended by the nice gal at Lowes:

Update on 02 OCT:

So I have it all spackle except a small bit by the desk.. Probably finish tomorrow. I think: