We just experienced the exact same problem, only ours was located to the right of the door when you walk into the camper. Ours started just below the knee and went to the floor. I decided since the wallboard/wallpaper was bubbling that it was ruined and would need to be replaced anyhow in order to make it look presentable again. So, I took my knife and cut open a spot to see what I was dealing with and it was mold....lots of mold. I ended up cutting out that section of paneling and revealed a pretty good amount of moisture in and around the frame of the trailer. I'm still not sure where the moisture came in from (I dried it out well with fans and such and it has rained a few times since...no leaks or moisture has reappeared). I read somewhere on this forum that condensation around the doors and windows, especially in humid places here in the south, can and will form (sweating is what they referred it as).
On a side note, my paneling and trim looks almost like yours (my TT is a jayco). Does anyone know of a place to order replacement boards or even how to identify the correct panel board number to order?