OMG Geo NR Gee
IMHO if the removal of the siding is an option to clothe your home in a 3.5" of foam I'd be all over that.!!! Remove the siding leave the R12 fiberglass and put a insulated barrior on your home. (Long Screws with plastic washers) Put the foam boards on the 2 x 4s tape the joints then strap the walls and new siding. Or better, look into stucco. (Dryvitt or Synergie) this is an additional layer of foam board (beaded foam) and then covered with a modified mortor and a latex type colour of your choice stucco. You will have a tight home with super insulations and insulating areas that are otherwise almost impossible to do like the rim joist. NO more thermal bridging thru the 2x4s check out some of the thermal pictures of homes with 2 x 4s you can see almost all in the thermal images. Good luck,. It will be a little work but probably a lot less than the work required to pay for heating fuels the rest of your life.
Randen
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