If the paneling has very deep grooves- you may want to fill them in with some drywall compound. Also, use a nice coat of wallpaper paste (even on pre-pasted paper).
If your paneling is in good condition, well adhered to your walls, and doesn't contain ridges and/or valleys, you should be able to wallpaper over it. You will need to apply a good quality wallpaper primer to the paneling before you begin.
Wallpaper paste may not adhere to you paneling, so lightly sand it first. Then hang paper liner to cover up the paneling's grooves and seams. Last, hang your paper.
I would not recommend it. It will not stick well, and you will have bubbles where the creases are. You can however paint your paneling. You will have to use multiple coats.
Yes, there is this textured wallpaper that you put on the paneling first, then you paint on it. It looks like a wall that has been textured. Also you can use another wallpaper called paper illusions. It is paper you tear in to different sizes and put on your walls no matter the size you tear it blends.