wood plank walls

[blaze]

I recently removed all the deteriorating plaster and lathe walls in a room. Underneath were large wooden horizontal planks approx. 3/4" thick. I carefully removed these planks with the idea of putting them back and using them as the finished interior walls.

Questions:

1) I would like to insulate behind the planks but the existing studs are 3 x 3 (not 2 x 4) such that I cannot use standard batt insulation. I don't want to restud with 2 x 4s so my options seem to be 1) put in the standard batt insulation and compress it to fit within the 3" space (thus losing R value) or use some kind of rigid board insulation (expensive !!!).....any ideas on a good inexpensive solution ?

2) The planks are very nice but they have gaps between them (approx 1/2"). I would like to chink between them but am not aware of any good products for this purpose...any ideas ?

[junkout]

well are they true 3" if so insulaton for 2x4 wouldnt compress that much and should be ok