If this is an exterior wall and you are in a heating climate, then you'll still want a vapor barrier on the living space side of that wall. The key is to not have two vapor barriers on the same wall. But remember, HB is not a vapor barrier. So when you gut it to the studs, you can reinsulate with unfaced FG batts if FG is your insulation of choice. Whenever using FG, I'll use unfaced batts. I then cover that with 6-mil polyethylene, stapled to the studs. The poly gives a continuous barrier, a much more effective barrier than faced insulation. You are correct...with the large tiles, you'll want your walls flat, plumb, and your corners square. "Flat" and "plumb" will give you nice corners. After you gut to the studs, you can simply use a level to make sure that the corner studs are plumb. The you can run a level, a straight edge, or use a string, to make sure that the wall itself it flat and all studs are in plane. If you have small discrepancies, the offensive studs can be shimmed or planed. If the wall is really wacky, then sometimes it's best to restud the wall by sistering new studs to the old. With the studs on plane, you then do your plumbing and electrical as needed and then hang your cement board. Where people go wrong is when they tape and thinset the seams of the cement board they leave too much thinset on the joint and create a hump. All you want to do is fill any gaps with thinset so the HB can bridge from one piece of cement board to the next. That's it. Rectified tile is tile that is fired in very large sheets and then cut to size. So the tiles are usually quite flat, have sharp sawn edges (like a marble tile would have), and they are pretty much exactly the same size. Non-rectified tiles are cut to size then fired. So the clay can shrink a little here or warp a little there during the firing process. Take a stack of several tiles and set them on edge, like a deck of cards. Square up two edges. The other two edges will show any discrepancy in tile sizing. In general, a rule-of-thumb of sorts is that you want your grout lines to be 3 times the size differential. If your tiles were off by 1/16" in size, then you'd shoot for a 3/16" grout lines. The old guideline used to be 1/16" minimum grout width. That's been changed to 1/8". Can you go smaller? Sure, but it could slow down the installation. It really is dependent on the tile. Flat. Warped. Square. Pillowed. Bowed? The wackier the tile, the more difficult it is to get a good installation with small gout lines. Rectified tiles, being uniform in size, can usually be set closer together than nonrectified. Another thing is tile size, specifically the size you are using. With the proliferation of long rectangular tiles like your 12" by 24" tiles, lippage from bowed tiles can be a concern. Example, stack two of your 12 by 24s and then flip them up on edge. Do they nestle nicely against one another? Now flip one tile over so they are glaze-to-glaze. Do they still nestle tightly together or do they rock against each other? Longer tiles like that can have a bow or an arch in them. That's why your tile shop gave you guidance regarding the 33% offset. If you did a straight 50% offset staggered brick pattern, the high point of each tile's arch would be next to the ends of the neighboring tiles. Any bow in the tile would show as lippage between adjacent tiles. Reducing the offset to 33% or 25% reduces lippage. All that being said, lippage is always a concern. But it's more a concern on floors than walls. I had a job years ago where the homeowner wanted flaws in the wall tile. They wanted it to look imperfect, a little rustic, they wanted lippage. On a floor I'd never do that.

The cement board fastened 8" requires all board edges to be reinforced with alkali resistant mesh and embedded in thinset. Now you can apply liquid or sheet membrane waterproofing. If sheet membranes are selected you can use it to substitute mesh tape. To simplify. You should be able to shower without any tile installed. The tile is only cosmetic. Which ever product is selected follow the manufacturers instructions. They all have a tech support line and you should use it. Your present contractor does not have the knowledge to be installing showers if he believes the cement board alone is waterproof. Red Guard, Laticrete hydraban are usually readily available liquid applied systems. I was typing and was not aware of Tundra's post.

Yes, 1/2" will increase noise I believe (that's what I have). I did *reduce* my noise by replacing what I had with a ThermaSol NTST-SN "whisper" steam head. However, it is still too loud to listen to music coming from my speaker in the steam shower. SO, I now use bluetooth waterproof headphones, which work well.

(rewriting as I didn’t see my post) Hi everyone thanks for sharing your very helpful thoughts. They used orange schluter kerdi board (pic below) everywhere inside the shower. They then added mud on the ceiling that covered it up (not sure why - level?) One thing that bothers me is that they added these 2 inch screws to hold up the tile and I thought that was weird. Those screws must be penetrating the vapor barrier, no? I can’t change the shower head. Is this orange board okay? What to do at this point? I think they need to replace the kerdi board that’s penetrated. But then again, how to tile it while maintaining a 2” slope per foot? Should they tile from the shower head away to the surrounding margins of the shower? Thanks!