We are having a direct vent fireplace installed in our 100 year old house. We have found that our walls contain sawdust insulation. The contractor has recommended installing a metal box to vent the ventpipe through and says that this is the standard way that they handle this (yes, they are licensed to install fireplaces, and gas, etc...). The fireplace manufacturer (comfort glow) says that as long as a 1 inch clearance is maintained from combustable or non-combustable materials, that there is nothing to worry about.
Does anyone have any experience with this? Does this sound correct? OLD sawdust would be highly combustable I would think...

Any sound advice from a pro?

Thanks in advance...