Walls and Ceilings - plywood walls in kitchen

I purchased 100+ year old house a couple of years ago and have been slowly repairing it. I started a cosmetic redo of my kitchen and, while removing the badly damaged lineoleum floor, I found the plastic wall tiles behind the stove had melted. (It must have happened when the former owners lived here, that stupid stove hasn't worked since I bought the house. Without a microwave, I would have starved. :) ) I knocked off the tiles to check the wall for damage, and have discovered that all the walls in the kitchen are cheap plastic tile over plywood.

I don't have the budget for a complete kitchen remodel - I've recently reroofed, bought new gutters, fixed the chimney, had insulation added, etc.

I've considered putting a skim of drywall compound over the plywood and paint it, but I'm concerned it's neither fire-safe or hygenic. I've considered gutting the walls, but I would have to remove all the cabinets etc. and I don't have the money for new cabinets, plus I don't have any drywall-savvy family or friends to help me and I don't know how to do it alone. What should I do? I mean, besides eat out every night ? ANY advice would be greatly appreciated. Thank you!

Thats a tough one. If you are going to fix it you should fix it right. That means gutting the kitchen. If you don't have the money right now I would suggest to paint the plywood and live with it that way.

Thank you for your response! I think I'll temporarily clean it up and paint it, and start working up a budget and some savings to have it done next year. I do appreciate your advice - its hard when all your family and friends' responses are "uhmmmm.....good luck with that."