Particle Board - ugh.
What's the exterior condition of the garage? If it's rough then I'd say go for it and pull the sheathing and particle board - though I'd be tempted to go with OSB instead of plywood for the cost. I think I would do one wall at a time just to make sure the structure stays as solid as possible. If the exterior is in good shape that makes this a tougher call.
Re: insulating the foundation. How deep are the footings? I wonder if a good backhoe operator could dig a narrow trench along the foundation and not leave too big a mess? It's probably worth talking to a foundation contractor to see if they have any ideas.
It looks like there are several options re: rigid foam insulation
DOE - Foam Board Insulation The important question would be - what's the cost per R-value compared to the blow-in cellulose? Given that the Mooney Wall is supposed to have a true R-value of about 18 I would hope that the cost is comparable.
Regardless, the electrical is a loss. Better to start fresh than deal with that mess.
Good Luck!
Tim