Sure, you can get
away with 1" SIS in Juneau, but that would still only give you an R14 whole-wall R, in a temperate but ~9000HDD climate. There's a good argument for taking it to R30 or better (especially if you're heating with oil or propane.)
Rather than replacing all the T-111, replace only the damaged peeling or rotted pieces with a suitable-thickness plywood or OSB, and leave the soundboard in place. Drill from the outside and blow cellulose in over the existing batts. Then rather than Dow SIS (R5.5 @ 1") , put at least 2" (R10) of XPS or (R8) unfaced EPS, and you'll have an ~R20 wall. If you use 3" of iso you'd have an ~R30 wall, but if foil faced goods are used you'd be running the hazard of creating a moisture trap, given the poly sheeting on the interior. If you stripped it all the way to the studs a section at a time, stripping the poly sheeting would allow you to go much thicker on the exterior foam, and it would be toleratant foil facers, etc., since it would have a drying path toward the interior.
With even R8 on the exterior of a cheap OSB sheathing there is effectively zero risk of wintertime moisture accumulation in the structural wood in that climate from vapor diffusion through latex paint on the interior- the poly was only necessary on the T-111 construction since there was no way to rainscreen it. If you go with more than 2" of XPS (rainscreened siding or not) it would be a good idea to be rid of the poly since it would be too vapor tight. But you could go as thick as 4-5" with unfaced EPS (R16-R20), and it could still dry toward the exterior.
Stone veneer at the bottom can be difficult with a foam-overcoat, but Jesse Thompson's slate skirt over 6" of exterior iso on a retrofit came out pretty nice:
http://www.greenbuildingadvisor.com...ders-maine (Scroll down to "An architect works on his own house" thumbnail links to pictures of the retrofits are at the bottom.)
Roofing insulation EPS & iso scavenged from commercial building re-roofing is dirt cheap (Thompson's place ran ~$2500 in material for 6" thick iso!), and there is likely to be a source in Juneau if you snoop around. (Even craigslist searchs can find it sometimes.) The long fasteners required for hanging it may run a grand or so, but compared to virgin-stock 1" SIS you may still be money ahead.