Can I lay tile over drywall that has torn paper?
Given the cost of tile and the value (or cost) of labor, I'd go with ripping it back to the studs and installing a proper tile backer-board (Durock®, Hardi-Backer® or the like) rather than fuss with a dubious substrate. It will be faster than trying to repair the drywall surface and it's a better surface for attaching tile to.