if the walls are plaster does that present an added expense? I would replace them with drywall, but is tearing out plaster walls more difficult?

Under present circumstances it may be cheaper to tear out the plaster and install new drywall than to rip off the exterior wood sheathing and replace with plywood or osb.

Plywood price remain at over-inflated high prices because of the Iraq war, cost of fuel to tranport, and tariffs on imported lumber into the US.

You wish to avoid doing either by having loose fill cellulose blown in from the outside will the old siding has been removed.

This will allow you to install rigid foam insulation as a backer under the siding.

Foam has better properties to keep moisture problems abated.

I'd suggest a combination of blown insulation and rigid foam exterior insualation if this were my house. jmho

Thanks homebild. I like that answer !