over the years I've done a lot of renos and repairs to homes both old and new and if there's one consistent thing I've seen is insulation traps moisture (like a sponge) and prevents air movement causing rot and mold. I haven't seen this is old homes before insulating the hell out of them and installing vapour barrier was the norm. I can't tell you how many times I've pulled drywall to find insulation full of mold. I've even seen wall cavities full of water for the first few inches too. I suppose in a perfect world you could seal out all moisture but in reality, you can't and must make allowances for the water to escape. it's not the water getting in that's the problem, it's water that can't escape. in the Province where I live we've had so much trouble from this "insulation/energy conservation" of late. homes only 15 years old are rotting away while 70 year old home next door are dry as a bone. the only difference is the insulation/vapour barrier. personally I don't see an advantage in setting your house up to rot in a few years just to save a few bucks on heating.
I got out of it a while ago because the government says.. you'll build it like this, with this and that,.. AND you'll go good for it if something goes wrong. (AKA ..the New Home Warrantee) well, we have 20 plus years of evidence that it is not quite right and "if" becomes "when" in this part of the country.
now the thing is to drill 2 holes at the top and 2 holes at the bottom of the sheeting at every cavity between the studs and use 1/2" thick strapping to attach the siding to (called.. rain screen) this keeps the siding from transferring moisture to the sheeting and allows air to move through the cavities. we've also gone from 2x4 to 2x6 studs to get the R factor insulation in and still leave room for a gap between the insulation and the sheeting.
a good thing to observe is the water vapour that will get in and condense between the two panes of glass on double pane window if the seal is broken and the inert gas escapes to allow air in. every time the sun hits it, the air expands and gets forced out, then the sun goes down and the window cools and sucks more air in the equalize the pressure, with it is moisture. moisture that will condense from vapour to liquid. this moisture is not likely to escape either, it will just continue to accumulate. same thing happens to your walls but they are made of wood and will rot with a moisture content over 20%. you won't see this happen like with glass either, you won't know until it's too late because they will rot from the inside out.
anyway, if you're going to insulate, make sure you don't stuff the cavity full. leave some space between it and the outer panel and keep it up a 1/2 inch from the bottom too
Thank you for taking the time to post such a detailed answer to my question!
I'm in the same general business, and moisture control is the #1 goal with every new home we place.
We struggle too, with the insulation "craze" (more is better, make everything airtight).
Every structure we find that has moisture problems has a leak, has poor perimeter drainage, or is "too tight".
I asked the question because on reading your original post, it seemed you we offering a general "do not insulate period" sort of opinion.
I understand now where you are coming from, and why you posted as you did.
Insulation is good, but moisture control is WAY more important.
Rob
Waiting for "someday" will leave you on your deathbed wondering why you didn't just rearrange your priorities and enjoy the time you had, instead of waiting for a "better" time to come along...