Re: wall insulation predicament
It could be that the interior sheathing is performing a valuable effort to the structure. I have seen this on old houses where the weatherboards are applied directly to the studs, the sheathing is on the inside. Removal would weaken the racking strength. Yes, you can remove a few boards to wire, plumb and insulate, then put them back, add vapor barrier, and drywall.
My parent's 1888 home in Arkansas was built like that.
My current residence (900 miles from AR) has interior sheathing on the 1850 section.
Remove not the ancient landmark, which your fathers have set.