My house is 120+ year-old converted one-room schoolhouse in New England and I am told is "balloon construction". During the inspection, prior to purchase, I was told to be careful as I could ruin the advantage of this type of construction by insulating the walls.
After searching 'balloon construction' on the internet, I not sure why insulating the Exterior walls would be harmful. As an aside, the roof is uninsulated, the upstair Interior walls and Ceilings are well insulated, and there are firestops in the basement.
Is it a moisture concern, misinformation, or something else?