I am going three inches up from where the base and scenery wall meet. And trying to make as even as a line as possible, even though with a ruler I still suck. Doesn't rally matter as much as you'll see in the end.
Next I did an outline of what I would like for the scenery back drop to be like for my environment. Keep in mind heavily of the areas in front of it and to the sides you don't want your area looking to crazy. I think I edited this one segment of the wall 20 times before I finally cut it out.
I won't beat you down with more pictures of my wall when you will soon see the cut version of it anyway and besides you should be making your own unique environment, not copying someone else.:-P
Once you have something grab your cutting tool.....
In my case a kitchen knife lol, I couldn't find our scissors.
Make sure you are giving your outline wall some support since right now it doesn't have much and you don't want it bend messing up your cut. Once you've finished cutting along your series of lines you should have something that looks like this.