If you are concerned with using a plywood material, look into a solid wood product.
Prior to the invention of plywood, tongue and groove 1x wood was normally installed. The face surface of the 1x can be milled with either a bead or 'V' groove at varying intervals.
I would recommend that you go to your local lumber yard (not Home Depot or Lowes) and ask one of their sales reps. There are usually many local mill shops which supply the lumber yard with finish product and they will be able to supply you with samples.
A less expensive method would be to use moldings to create the look of wainscot. The actual wainscot is just your painted plaster or drywall below. The surface can be painted a complimenting color to the walls and or even faux painted for added accent.
Good Luck on your endeavors.