FYI. for future home repair novices,
I made another trip out to her house and peeled off more paint for a closer look and to do some work. The brown paper under the paint was wall board. I wonder why the paint peeled there? Maybe some moisture got behind it. However, I don't see any reason to think this is a problem that will occur again.
I took a scrapper and knocked off all the loose paint. Many layers deep - once the walls and trim were painted torquise! I removed about the area of about a square foot, the rest was on there good. The paint removed was at least a millimeter thick that left a noticable difference. I sanded the area and the rest of the wall to rough it up. There were many, many bumps like they originally had crumbs in their paint. Was this a style? The whole house has these inconsistent bumps, but she never minded for this many years and they go back to before the torquise color. I used a belt sander to clean most the bumps up and touched things up by hand sanding. The paint that is on there is like steel! I covered the area that was down to the wall board with light joint compound usign a trowel. I also filled in some nail holes and nicks on the entire wall. The process was pretty easy. It did take some time to sand down that steel reinforced paint.
It looks pretty good so far. I left it to dry and won't be back for a few weeks. Grandma doesn't mind the joint compound/sanded wall look for now, she said it looks better than the wall peeling off.
Next time I'll lightly sand the rough spots down and put a layer of primer on it. I'm going to match the paint color and finish it up with a few coats. Entire project will cost $50 - $60. It's $40 now, but I am yet to buy the matching paint.
Thanks, Jim