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Believe me that is NOT the worst tile I have seen BY A LONG SHOT. There are lots better ways to burn though some cash than replacing that!
If you have your heart set on tearing that stuff off and cannot be talked out of your foolishness then AT LEAST learn how to do it right. You will NOT accomplish anything good with a chisel. What you need to do is get the right tools. Get a manual carbide grit edge saw for work closest to the granite & cabinets, a set f carbide grout bits for a RotoZip or Dremel tool, a Fein Multimaster vribratory tool with appropriate accessories and a top notch utility vacuum. You'll also need heavy duty plastic to cover the granite, loads of tape to seal out the grit, eye protection and probably some utility lights, gloves, dust masks and a place to clean-up. Even fully cured grout has enough lime in it to really mess your skin and it is not fun to deal with those problems when the backsplash of your new house is torn out and you are in a panic...
You can find details of how to start cutting out the grout and removing the tiles online. I doubt that your substrate is going to be in good enough shape to just re-apply new tile. You will likely end up needing to patch the stuff. It is probably OK to use 1/4 drywall if you can find it. If you need to use something better I would probably rip out the drywall (only after all the tile is off it and the cabinet edge and counter top edge has been properly scored so that you get a nice fit) and then patching in backer board that has been cut to fit. LOTS of hard work! Pretty expensive even for a DIY with skills, as backer board does not cut as easy as drywall and you will end up wasting a few pieces, probably go through a stack of utility knife blades too...
If you hire somebody to do this PLEASE make sure they understand what you want the end result to be, as too many bone-headed remolding guys are going to try and get by with the least amount of work they can and then you will be wishing you had the situation you started with!
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