Yes, I'm suggesting continuing the same raised panel up to chair rail height as a wainscoting application.
I doubt the ceiling tiles are covering drywall, (but maybe), usually those type of acoustical tiles are stapled to furring strips. The raised panel technique could be done over a new or existing drywall installation, (get rid of the paneling, (looks dated)). Basically 1/4" oak or birch veneer with detail molding attached to create the "raised panel" effect. 4x8 sheets of veneer plywood would allow for 12 linear feet of material per sheet if you went 32" height on the wainscoting, (maximizes material with little or no waste).
The door doesn't look unattractive and does go with a raised panel decorating scheme - your budget, your decision.