I am just finishing up this project, so I thought I'd post some pictures. I did the downstairs portion of this about 5-6 weeks ago, and was waiting for grad-school to slow down so I could move on to the stairs.
Downstairs, I pulled the cheapo baseboard and replaced it with a decorative 6" version. I put a chair rail at 36" above the floor. Using colonial molding, I used the base dimensions of 24" high x 18" wide 'panels.' This gave me 3" above the new baseboard, and 3" below the chair rail. So, I obviously spaced the 'panels' 3" apart. It is all painted in semi-gloss white. I had to repaint all of the other trim around the doors, because it looked dingy compared to the nice, new paint.
I started working on the stairs on Sunday. Same chair rail and molding, with same spacing, but instead of baseboard, I just went off of the stringer that was on the stairs. It needs another coat or two of paint (notice the blue tape), but for the most part this is what it will look like.
We still need to decide what color we want to do the walls above the waincot, then get scaffolding and do that project (ugh). I also want to put some decorative molding/casing around the entryways, and maybe some nice decorative caps above the doors. Not sure, one thing at a time. I wanted to finish this wainscot, because the dining room is getting torn into next week.