What is your goal here? If it is just to update to 3 prong receptacles, there are several ways to go about it and short of a total re-wire, they are a distant second best. If you just need a few grounded receptacles, install a new circuit or two and put receptacles where you need them.
As I pointed out, your wiring is really old, especially if it is original. You should probably have it examined by a qualified person prior to starting any work. No sense in working on something that should be replaced anyhow.