Shower tile dilemma - what would you do?

[Bryan H.]

Just got this property under contract. I tried to get the seller to take care of this, but they wouldn't and just lowered the price instead. So now I'm stuck with finding a solution. The tile doesn't go up high enough and I need to do something so the drywall isn't destroyed.

I've thought of a few ideas. 

1. 1. tear off the bullnose pieces, continue the pattern up and reinstall bullnose
2. 2. tear out all tile, and just retile. I don't love the b/w but it's all new
3. 3. install surround, but that seems cheap
4. 4. install b/w mosaic above existing tile
5. 5. ????

What would you do?