We painted a good-sized panelled wall where I used to work. We did fill in the grooves, which was a pretty simple process. After cleaning the wall we primed it with "Kilz" brand primer, filled the cracks with drywall compound, sanded lightly, and rolled on another coat of Kilz.

However, please note that this particular job was done five years ago, shortly before I left that job, and that I have not been back into the building since. It may have held up perfectly or the paint may have fallen off the walls.