[chris vickery]

Paul, if you look in one of my pics you may see a ceiling mounted forced air gas furnace. Its not all that large, if memory serves its only about 50 or 60,000BTU an wasn't that expensive. I believe I got it installed around $1800 all in- furnace, chimney, gas lines, installation and taxes. I could have opted for oil but it has pros and cons. The biggest pro being that dollar for dollar you get more BTUs out of oil yet the cost is higher. Also, the potential environmental impact and damage should you ever have a leak...
Get some ceiling fans as well, they will help to keep the air circulation going which keeps the temperature more constant. Mine were about $129 each from Home Depot. I also don't play the thermostat game. Set it low and leave it there all winter. If need be, turn it up for the time when you are working in the garage. I only need to turn mine up a few degrees and it doesn't take long to be comfortable since everything in the garage is already a consistent temperature.
As far as plastic liner I am no expert. I believe the Ontario Building Code stipulates a fire retardant surface on top of framing such as drywall then other coverings may be applied over that. Not so sure this stipulation applies to freestanding garages but I do know it applies to attached ones in residential applications.
I guess you can see where my choice is for interior coverings in a garage. Quite a few friends have also been down the same road and that is what they went with as well.