Re: Considering a gut to studs...
I'd rather use roxul than the DIY foam kits. My poor boss tried to save money by foaming his house with those kits, and got nowhere, wasted almost two grand. If you want foam, hire the job.
When replacing plaster with drywall, plan backwards from where your finished wall surface is now, and shim the studs so the 5/8" rock ends up at the same level; this will save what can end up being a trim nightmare when you reinstall the old moldings. (You are going to save the old millwork, right?) You also need to correct for bowed studs, as the rock will conform to whatever is is applied to; the plaster was floated flat,no matter what the studs were doing.
Remove not the ancient landmark, which your fathers have set.