The only real issue with insulating the outside of the house is all of the windows usually need to be removed and moved out due to the added depth if they currently sit flush. It adds a bunch of work to the job. I'd definitely put up with the extra work if you're going to be doing siding anyways though.
I've never heard of spray foam going on the outside but don't see why it would matter. Maybe trimming it flat would be hard? We've always used rigid and taped the joints. Probably cheaper, definitely easier and for most purposes it's virtually the same effectiveness.
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