I've gone over and over the steps and I think I understand what to do. I'm a handy person and this is not beyond my abilities.

However, I don't have the vast majority of the tools that I will need since I have never tiled before. I'll probably need to buy not only the trowels, spacers and tile nippers/cutter, but also a paddle bit for the drill to mix the thinset, and either a hole saw or drill bits to make holes in the cement board for the plumbing.
All of these expenses will surely eat into my DIY savings. I have as much pride in a job well done as the next DIY'er, but I'm wondering if it will cost as much in overhead as it would in someone else's labor. I actually like to to home improvement projects, so I don't factor in the value of my time - that's a cost neutral to me.

I know the tools would be an investment, but aside from a fairly recently renovated master bath, the kitchen backsplash, and some asbestos filled tiles in the laundry room which we will probably never touch, this is a tile free house, so there won't be a lot of use for the tools - but you never know.

For anyone who has done this before - any thoughts on my concerns?

For a typical tub surround:

-poly sheeting: $10
-Half-inch thick Tile backer board, 4 sheets: $60
-Roll of mesh alkali-resistant tape: $7.50
-Tile: Name your price. Say $5 a foot for grins, for 60sqft it's $300.
-One bag highly modified thinset $30
-One bag Grout $15
-Caulk $15

So materials, rounding way up, about $150 not counting the tile.

Tools?
-Stapler to staple up the poly sheet to the studs.
-Utility knife and blades: You can score and cut the tile backer board like Hardiebacker with a utility knife. You can even cut holes with a utility knife, score the perimeter with the knife and pop out the center with a hammer.
-Stapler to staple up the poly sheet to the studs.
Hammer/nails: to nail up the backer board. You could use screws, but you'd need a drill with driver bit.

To cut the tile: The box stores will do it for you on a per cut basis. I have no idea what they charge. For for basic tile you can use a score and snap cutter. They can be had for $25-$50. Or you can buy a cheap wetsaw at the box stores for $50. Or buy one on craigslist then resell it when you are done. So...$50 let;s say.

Always good to have tile nippers, $20. Have your plumbing fall on grout lines instead of in the middle of a tile and you can nip a hole instead of having to drill a hole.

To mix and spread the thinset:
-bucket
-margin trowel: $7.50 Yup. To hand mix the thinset and grout. The thinset, mix maybe a third of a bag at a time. Pace yourself. Or you can buy a paddle if you have a low-speed drill that has the torque to spin it.
-notched trowel: $5, 1/4" x 1/4" to spread the thinset.

To Grout:
-Grout float: $10
-Grout Sponges: 2- or 3-multi-pack for $5

Basic hand tools, about $50. Add $50 for a tile cutter, so total tools is about $100.

Materials: $150
Tile: $300 @ $5 a ft
Tools: $100

Total, about $550

Rough guess.

How did I come up with 31 sq ft? Why, because I apparently have two 7in tall bathtub walls. My handwritten calculations were 30 x 70 = 210. Whoops. Thanks for that. Looks like it's just over 57 sq feet, like you said.

Would you say that it's easier for a first time tiler to use larger tiles as opposed to smaller? I like all different kinds of tile; I'm not married to any specific style.

For a first tie tiler, the easiest is probably to use a tile that has self-spacing lugs or nubs. Little bumps on the edges of the tile. Get your initial course level and away you go.

The larger the tile you use, the flatter the wall has to be. Smaller tile can conform to any imperfections. A large tile would "rock" over a hump in the wall, for example. You might get one edge of the rocking tile even with the edge of its neighbor, but the opposite side would stick out and result in "lippage".

Smaller tiles also increase the likelihood that your plumbing will be near a grout line. You can use nippers to shape the required hole on the edge of the tile instead of a coring bit in a drill to make a hole in the middle of a tile.

Not a hard and fast rule though. Larger tile will result in less grout. So it's a balance either way.

Biggest lesson I can offer if you use lugged tiles is that you don't set your first row (first course) of tile on the top of the tub deck. The tub might not be level, it might not even be straight. Use a level to find out.

I'll skip the bottom course of tile and shim a straight edge, usually a piece of angle iron, off the tub. Set it at the right height, which is the height that you want the bottom edge of the second course of tile to be. Level it, then tile away. Once done with the wall, remove the angle iron and fill in the bottom course.

The following article is an old one, it shows tar paper instead of 6-mil poly sheeting behind the tile backer board. But the overall work flow is the same.

Tub basics

Putting a plan in place now. I'll be changing out the shower/tub trims and will definitely need a new valve. I know my limits and using a soldering iron is one of them. So, the steps will be:

1) demolition

But is it:

2) plumber
3) vapor barrier, cement board et al

or is it the reverse where I just cut the new hole for the valve and allow the plumber to adjust pipe length and maneuver the valve into the hole I created? We have an access panel behind the tub - access to the plumbing is a non-issue. It can be done at any time.

Does it matter?

Demo down to the studs. Clean up any mess.

Then have the plumber come in and do his thing. Be specific on where you want the supply valve, how high you want the shower head, etc, and based on where you want the head, the arm may need to be higher since the arm is usually angled.

Example, if you are planning on using 12" square tiles and you want the valve to fall on a grout line, then have the valve centered 12", 24" or 36", etc, above the tub deck. Same with the shower head. It's not a hard and fast rule that you have to do that. Tile layouts can be altered to get the pattern you want, or need.

Add any ventilation, lighting, wiring, etc, as needed.

Then poly, then install the tile backer, etc.

Your valve will come with a template for how large a hole to cut in the cement backer board, etc.

One idea I had is to use a mosaic accent on the fixture wall, so that I can remove tiles for the plumbing to go through. I hope it works!