Patching and Plastering - Please help us repair our ceiling and molding

We recently removed the horrible crown molding from our living room - it looked awful due to the half-a$$ed installation, done by the previous owner of our house. We are left with a bit of a mess, and we are a) limited in our DIY skills and b) limited in budget (ie, we'd prefer not to hire this out). Take a look at the 2 pictures and let us know how we can repair the two issues we've got. The catch is, we don't want to reinstall crown molding, as it does not suit our style.

So we're looking to smooth out the area around the entire room where the wall meets the ceiling (1st pic). Is it a matter of sanding, smoothing with some kind of spackle or putty, and repainting?

Also, we've got a big built in bookcase and the top molding (see 2nd pic) is damaged on each end from the removal of the crown molding. We are probably not capable of removing the entire built-in molding as it's got many layers of paint and I'm not sure how it's attached. My idea is to cut two new pieces of the same molding, one for each end, stick 'em in there, add some wood putty, sand and paint. Not sure if there's a better, doable solution.

Many thanks and apologies for the long post!

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You have the right idea on smoothing out the bad area. I would use the powdered 45 minute joint compound. That way, you can have it done in a day, without having to wait for the mud to cure between sandings. Also, using an extension on the end of the crown may be the only thing you can do, especially if it is tied into a bookcase. It will also help to cover up the ugly corner.