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Default advice needed... water/wall problem above fiberglass shower stall

I have a one piece fiberglass shower in my master bath. The
fiberglass stall is only 6 feet tall and the remaining two feet to the
ceiling is painted drywall. Not surprising to me, the drywall is
crumbling where it meets the fiberglass due to the
moisture/steam/splashes from the shower. A small bead of caulk seems
to be ineffective. What should I do? Is there a way the drywall and
fiberglass can peacefully co-exist? (More caulk?) Should I tile the
area from the fiberglass to the ceiling? (I have a tile floor that I
hope I could match). If I do this... how to do it? Cut away all the
drywall, install Durock directly to studs, tile on top of that? Would
this be a hard job? Any advice?