I posted a version of this question previously, but it didn’t get as much activity as I was hoping, so I’m trying again. Really hoping for Martin or Dana to weigh in here.

Climate Zone 4 (central VA). House is a 1925 balloon-frame stucco 4-square. There is blocking in the wall stud cavities in between floors. The stud cavities are not open from basement to attic like in some old balloon-frame houses.
Wall assembly is painted stucco on metal mesh>tar paper>1″ x 12″ wood plank sheathing>3.5″ open wall cavity. We have removed all of the old plaster/lath to facilitate electrical, plumbing, and insulation updates. This is a gut/rehab.

So…How should I insulate these walls?
Dense-pack cellulose and rely on its hygroscopic properties (simple)? Treat it like a house with no sheathing and build an air gap, then dense-pack (labor intensive)?

Thanks in advance.
-Travis