Designing Kitchens and Bathrooms - To remove existing concrete surround or not.

I've demoed a bathroom to get and remove some old moldy linoleum and flooring. I've removed the old tub which had some damage to it so I'm going to be installing a new one along with fixing the plumbing and adding new fixtures. During the demo process I had to remove a large part of the concrete surround for the shower in order to get the tub out of the alcove. The concrete portion does not go up to the ceiling.

I'm thinking of tearing out the concrete completely and putting backerboard up to the ceiling. Or is there a way to salvage this? Or should I use cement instead of backerboard for the shower surround?

I assume you mean a mud wall shower. Wire lath with cement over it, and tile on the cement??? About 1"+ thick?? If yes, add hardibacker or cement board to the same thickness, then retile.

What you're saying is just clean up the bottom to make it straight. Leave the Cement (mud wall) up (it has wire message and is surrounded by a metal L frame) and just add concrete backer board/hardibacker to fill in the wall and parts I removed?

For some reason I'm thinking I need to remove it and redo it with concrete board or hardibacker.

A mud wall is far superior then cement board if still in good condition.

Here's what the base around where the bathtub was currently looks like:
http://www.chriseaston.com/wp-content/uploads/2009/06/img_2437-150x150.jpg (http://www.chriseaston.com/wp-content/uploads/2009/06/img_2437.jpg)

I don't mind spending time after tearing it out putting up a new concrete block (of course, I'll need to learn this but that's fine by me) or trying to salvage it. I just don't know if it needs to come down or if its possible to repair. There are a few holes that i poked in the concrete and its backed by what looks like Building Paper. Thoughts?