Can’t you just cut out the stud wall section? Just use 60mm or 80mm wood fibre board fixed directly to the walls with plastic pins, render/plaster on top. I just used sand/lime for the render with mesh.
as to paint why not lime wash - you can buy large tubs of white and some powders for colour. Maybe a little restrictive in colour options but it’s pretty straight forward to apply so long as you wet the walls down before and as a bit after it has been applied.