Hi John,
Yep, painting can be tricky. Painting done before a property is tenanted, is an 'improvement'.
Painting after tenants have been in there may be a repair, but painting a whole house after, say, 6 months tenancy is pushing the boundary.
With the wallpaper thing, I suspect it's one of those things where you have to make a judgement call - the ATO wouldn't be of much help of you phoned them.
There is an ATO decision that many people don't know about - ID 2002/330. It related to ripping up daggy carpet and polishing floors. The ATO deemed this a repair' because there was 'no change to the character or functionality of the property'.
I'm thinking this is similar to taking off that wallpaper. I would claim it as a repair, and if questioned explained you did so because of one of their Interpretative Decisions. I find if you can provide a logical (and referenced reason) for something, the ATO will generally respond in a logical and reasoned way. This isn't advice, but it's what I would do in your situation.
Scott