I’m in  Zone 4 (Marine) – Seattle

I’ve done a ton of reading of GBA, FHB, youtubing and podcast listening but have no practical experience in insulating a basement 🙂

I have a pretty good handle on planning the insulation of the below grade 8′ wall in my walkout basement with seam sealed rigid foam and a 2×4 wall in front of it with unfaced batts (R15 Rockwool for me).  I also read up on using 2″ rigid foam (loose cut and sealed) on top of the concrete wall to encapsulate it and also use it for the Rim Joist.

The part I am struggling with is how to handle the transition from my rear below grade foundation wall to partially above grade and a 2×4 wall on top of the ~24″ foundation wall that is also partially below grade as it steps down the hillside.  To further complicate things, this wall has a brick fireplace that is only 4.5″ proud of the foundation wall so 2″ of rigid + 3.5″ framed wall wont work.

I’ve attached a photo of what it looks like currently – the previous owners built the “inner” 2×4 wall on top of the 8″ foundation for drywall attachment I guess and it was filled with a mere R13 of foil faced insulation with the drywall just glued to the 8′ foundation wall and the step down portion.  For the rear wall that starts at this corner and goes off to the left they used R13 foil faced batts inside a 2×4 wall with the studs on their face (1.5″ deep wall).

Due to the fireplace projecting only 4.5″ past the foundation wall I can’t do what I am doing across the rear wall (2″ continuous and then 2×4 wall with rockwool).

Have tried to apply the concepts I’ve learnt along the way even though I haven’t seen this scenario via the searches of this forum.

Other info: No water issues in the basement – there is poly under the 4″ slab and some sort of water/damp membrane on outside of below grade foundation walls with drainage according to the original plans I found when we purchased in 2011 (1969 build).  “Basement” is ~1600sf – 3 bedrooms, full bathroom,  laundry and rec/tv area.  4 BR house – master bedroom is on upper floor so basement is a major part of the house.

So a few questions:

1. Anyone see any issues with the assembly I’ve come up with?  Larger image available here:
https://www.dropbox.com/s/93nd16gcynlmf0h/Wall-StepDown.jpg?dl=0

2. Any way to make it simpler? I assume I’ll only find this in 2 locations of the basement so no big deal if this part is a little more complicated.

3. Do I need to fill the entire space in the double 2×4 wall that is 7.5″ deep?

4. Which rigid foam should I use for my assemblies? 2″ RMax Polyiso OR 2″ Foamular XPS?  Most YouTube videos and articles I’ve read show the use of XPS but a lot of responses on here say to use polyiso for environmental reasons.

PS – just noticed I missed drawing the top plate for the new “inner” wall – just imagine its there 🙂