I did a similar project in my house, though the durock and the
sheetrock were the same thickness. A detail you left out: which one is
thicker in your bathroom? If the durock is thicker, I guess I'd just
keep tiling up and use some extra mastic behind the tiles at the top,
and then seal off the top of the mastic with grout-colored caulk. If
the sheetrock is thicker, then I am not so sure.