We ultimately decided to demo the walls and now have full stud cavities accessible. It was about 60% full  of (settled) blown-in cellulose from 30-40 years ago. They are currently standard 2×4 studs, but we could and probably will strap the walls to 2×6 size. This is Canada climate zone 7A.

The choices are:
1. 3″ of spray foam – $11,000 – (R19.5)
2. 3.5″ of Rockwool plus 1″ rigid foam and 0.5″ air gap – $7,500 (R19)
3. 5.5″ of Rockwool – $5,300 – (R22)

The wall assembly is hard coat stucco, tar paper, and 3/4″ lapped sheathing, then the studs.

The tightness of spray foam appeals to me but not the cost. 

I have read a ton including this article about managing water: https://www.greenbuildingadvisor.com/article/managing-water-and-insulating-walls-without-sheathing That said, I do have sheathing so it’s not directly on the siding like some homes. The other issue I have is with vapour barrier code. I’m not sure using the rigid foam as a vapour barrier is feasible and having rockwool sandwiched between MemBrain and rigid foam seems like a bad idea.

Given that in all the cellulose walls that have been like that for 3-4 decades there is no water damage, am I really at risk of just putting in 5.5″ of rockwool and then slapping on the MemBrain and drywall? We will also be getting brand new triple pane windows with high quality flashings.