I did add bracing after all. I'm sure it helps although it's not as if it's night and day different.

I trimmed out the wall paneling using trim pieces cannibalized from the bump out I removed. I cut down the corner molding and ran it across the top of the extra layers of paneling, and used the flat trim to cover the seam where I ran short. I filled all the holes with Elmer's Carpenter's Wood Filler in White and it looks quite good.
PS: if you have any holes to fill in the blond colored wood like my cabinets, I used Minwax Wood Putty in the color Natural Pine. It looks quite good.
All in all, I'm happy with how things turned out.
