Practice your technique. Use a small square of extra Sheetrock that is not attached to the wall. Use a drywall knife and scrape it in various patterns, using the edge and the side of the blade. Gently tap the surface with your hammer to create round dimples. Learn how much force you can use to distress the Sheetrock without actually going through it. Keep in mind that you won't be able to use hard blows on the wall, because you won't have any support behind the Sheetrock.
Prepare your work area. Lay a drop cloth underneath the wall you will be distressing. Tape it down so that it won't move, and dust or debris won't be able to get between it and the wall.
Wear protective gear. Pieces of Sheetrock may come off the wall, and they could cause eye injury. Wear safety glasses. Also wear gloves and a long-sleeved shirt.
Distress the wall. Use the same techniques you used during your practice session. Work slowly -- this damage cannot be undone. Apply distressing in a random pattern. In reality, damage is never uniform. Recreate this effect by focusing on different areas around the Sheetrock. Leave some areas pristine and other areas heavily scarred. You can paint over this distressing with latex paint, or simply leave it bare.
Sand down the rough areas. Apply primer and paint in a color of your choice. The dings will show through the paint.
Clean up the mess. Fold up the drop cloths so that they catch the majority of the debris. Don't let it spill on the floor if you can avoid it. Shop vac up any remaining debris on the floor.