Is there a good way to join wood paneling and drywall?

OK, we are planning to cut a p through with a bar in the wall between our dining room and kitchen. On the dining room side the walls are drywall; on the kitchen side they are wood paneling. We would like the interior of the p through area to be drywall but we unsure how the drywall of the interior could meet the paneling in the kitchen. Could we just tape and mud the corner like we will on the dining room side? The alternative is to just use wood trim but we would really prefer the smooth look of drywall. Has anyone done this before?