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I used drywall paper tape with a couple layers of setting drywall compound (aka 'hot mud', but my application was in a closet, and didn't have the complexity of a wet installation or tiles pulling on my patch. Even so, it seems about as solid as the rest of the wall, and seems to work well.


If it was me, I'd cut away the bad drywall and replace it with 1/2" hardi board. That'll give a flat, solid and waterproof substrate for your tiles, in contrast to the beaten up drywall you've got now. Oh, and be sure to thoroughly caulk the gap between the drywall and the hardi.


While the usual trick for super-flat butt joints is to set the gap between studs (see the first answer in Should drywall be hung horizontally or vertically? for an excellent description), it doesn't seem like your situation would work for this. Sadly, the best advice is to get a 10 or 12" taping knife and feather, feather, feather. (I personally wouldn't ...

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