Once you’re down to the brown paper you’re going to have trouble if you don’t seal it before you attempt to mud. The brown paper will continue to shred (for lack of a better word) when you introduce moisture.
The solution is to get yourself a quart (or gallon) of GARDZ. You can roll or brush it on, allow it to dry, and then carefully remove any brown paper that isn’t firmly attached. And then repeat the process. It may take a third round. Once you have a good surface you can skim with a light-weight pre-mixed joint compound (e.g., Sheetrock Plus 3).
After mudding, you’ll sand, prime the area (and let it dry), then prime and paint the entire wall.