I've usually kept this type of comment to myself on topics where people are remodelling, but I'm going to throw it out there anyway and will shut up if it's not appreciated.
FWIW: I'd strip the drywall off of the outside walls, inspect for wood damage and check out the wiring and then I'd have spray foam insulation sprayed to fill the cavity. Instant vapor barrier and best available insulation. Add new drywall, finish it, paint it and feel good about my work. I can't help but believe it would be more than worth it over the long term, unless I were planning to move really soon. Even then, with some photos of the open walls, it might be a great selling point to someone who was afraid of how much it would cost to heat and cool.
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