I have a house I'm preparing to sell which has some minor termite damage.
House has been treated & bug free for a decade or more, but several areas
have odd drywall damage wherein the termites actually ate the paper off the
drywall & from underneath the paint. Damnedest thing you ever saw. My
inclination to save time/effort is simply to remove all the loose bits & mud
the whole surface level (we're talking about an area about the size of one
4x8 sheet). I know the consensus on this is probably going to be "replace
the effected sheetrock", but failing that what might be some other options
be? If I go with a re-mud, should I just use regular joint compound, or
might something else be better?

TIA

Bill