Re: exterior garage walls
Yes you can cut off the bottom 2 feet and replace with plywood, I would suggest pressure treated plywood.You will need to use plywood the same thickness as the T111 and rather than caulking I would install flashing that slides up behind the T111 and hangs down over the plywood. If your butt joints don't meet a stud cut a 2 foot long piece of 1X place half of it behind the first piece of plywood and glue and screw it in place. Then when you install the next piece of plywood install screws through it into the other half of the 1X.
Be sure you live your life, because you are a long time dead.-Scottish Proverb