I had to remove a section of plaster and wooden lath from my living room ceiling the size of about 48x48 because of a leak.Would replacing it with drywall be the best option and what would be the best best joint compound to use.
Put drywall up and use spacers to get the surfaces level.
Then fill the gaps with filler and use the edging tape or webbing which helps prevents cracks as things move.
But looking at that construction I guess movement will happen...
Unless you plan on replacing the whole ceiling with drywall, it would look better and be less work to hire someone to replace the section with the original materials and methods - plaster and lath.