A coat of Kilz 2 stain-blocking latex primer with a short nap roller, 1/4". Then two coats of Porter 100 series Hi-hide interior latex also applied with a short nap roller. Make sure the roller spins freely on the frame or the roller will just slide on the slick paneling. Use wax on the frame or WD-40 before you start. Caulk everything right after you prime. The primer will make everything you need to caulk plainly visible. The short nap rollers will let the grain show through the paint as you can see in the second picture. If you don't want the grain to show or if you have patches or other imperfections, paint with a 3/8 nap roller and do 3 coats of paint. I barely did any prep at all. I drove down a few nails, added a nail in a couple of places, not much else.
I've done the same thing to many other homes and our local Farm Bureau Insurance office. The demonstration I did for them was; I painted a sample color on a scrap of paneling with a piece of scrap casing glued to it. I painted it in the manager's office. I went back the next day, pulled out a sharp 5 in 1 tool and I couldn't scrape it off. He asked (skeptically) how sharp it was so, I Planed off the edge of the paneling with it. He was impressed, Hey! I was impressed! That was 4 or 5 years ago, the office still looks great. My kitchen was painted this way 4 years ago and the only problem is where my son's chair rubs the wall.
Tom in KY, shhhhh, I told Sandy that I'd put up a chair rail 2 or 3 years ago. Heh-heh.