We removed the ceramic tile from the bathroom wall and found linoleum glued to the wall. It got me thinking that that wasn't really bad idea. Could I use peel-n-stick tiles on my bathroom walls, just 3 or 4 feet up from the floor (not around the tub/shower) and top it off with a trim piece? That would be a lot cheaper than the bead board paneling I was going to do!

A person can do anything they want, not my thing but if you like it who cares

Will steam from the bath/shower affect the peel and stick tile adhesive?

No, it shouldn't. Otherwise you couldn't use on the floor either.