I'm more worried about the lateral racking support as opposed to vertical loading, its old balloon framing. Spray foam and the dumpster fees are wildly outside my budget right now unfortunately. Would the foil facing inside the house create condensation between drywall and insulation? I guess it's better to get moisture in the new stuff than the structural stuff, if I had to choose. Thanks for your response!

Possibly! I'm in the northeast coastal US, so probably not?

The false wall is also what I'm going to use to hang drywall, shelving and cabinets.