How tall is this attic space? How large are the joists in the "floor" area and what spacing do they have? How deep are the roof rafters and what are their spacing? What is the current attic ventilation? How would you plan to access the space with a stairway? There are certain minimum height requirements for living space, and the requirements for supporting live loads differ from those of just storage. Stairways have to have a certain rise and length for the height involved and eat up a lot of space. Where do you envision that space to come from on the second floor? Your project may be more involved than you think, or completely undoable depending on those factors. You need a site visit from a structural engineer, architect, and contractor to determine if what you want will even be doable. In the meantime, plain (not architectural) asphalt shingles are a fairly cheap item and well within most DIYers ability to install. Which means that they can be considered sacrifice at a later date if your other plans come to fruition. But, you need to take steps to protect your home from leaks, so needing a roof trumps all of the other "what ifs". As far as the ductwork goes, rigid ducting is far superior to flex duct. There is no need to replace it at all. Just make sure that the transitions are properly sealed and add additional insulation if you desire.

OP here. My roof is in great shape so I won't be replacing it any time soon plus it has some interesting curves to it so adding rigid foam and sleepers over the roof deck might be more trouble than its worth. See pic: I do have the gable vents and the giant vent over the porch so I think ventilation in the front part of the attic (the shorter knee wall in the original picture) is ok. I think what I've decided to do is to add soffit vents on the back of the house (where there are no intake vents). Then I'll install a foil radiant barrier on the bottom of the roof deck in all of the accessible attic areas. I will pull down the wood paneling stuff, add rigid foam between the studs in the knee wall as well as the roof rafters, and install sheetrock over it all. Its all 2x6 so I should be able to get 4 inches of foam (R20 or so) in there while still leaving a 2 inch gap for air flow under the roof. I found a guy on craigslist selling 4 inch closed cell foam at 75c per sqft. I've also thought about being cheap and just using fiberglass batts (r16) with baffles on the roof deck instead of foam. That would cost r4 but save quite a bit of money. So long as I make sure I've got a good air seal with the sheetrock and plenty of ventilation, after that, its all down to r value right? I've also essentially given up on the thought of spray foam on the roof deck. That would cost in the neighborhood of 5k plus the cost of ripping off and reinstalling the sheetrock.

Perhaps you are in a region so dry that moisture entering through crawlspace vents is not an issue. An unvented crawl space is adequately described in the 2012 IRC if that is the applicable building code. But the space is only sealed from outside air and the earth and must have inside conditioned air supplied to it or an exhaust from it. You are correct, insulation should be at the perimeter walls rather than in the floor above. R408.3 Unvented crawl space. Ventilation openings in under-floor spaces specified in Sections R408.1 and R408.2 shall not be required where: 1. Exposed earth is covered with a continuous Class I vapor retarder. Joints of the vapor retarder shall overlap by 6 inches (152 mm) and shall be sealed or taped. The edges of the vapor retarder shall extend at least 6 inches (152 mm) up the stem wall and shall be attached and sealed to the stem wall or insulation; and 2. One of the following is provided for the under-floor space: - 2.1. Continuously operated mechanical exhaust ventilation at a rate equal to 1 cubic foot per minute (0.47 L/s) for each 50 square feet (4.7m2) of crawlspace floor area, including an air pathway to the common area (such as a duct or transfer grille), and perimeter walls insulated in accordance with Section N1103.2.1 of this code; - 2.2. Conditioned air supply sized to deliver at a rate equal to 1 cubic foot per minute (0.47 L/s) for each 50 square feet (4.7 m2) of under-floor area, including a return air pathway to the common area (such as a duct or transfer grille), and perimeter walls insulated in accordance with Section N1102.2 of this code; - 2.3. Plenum in existing structures complying with Section M1601.5, if under-floor space is used as a plenum.

To follow up, I spoke to my friend about her build. She called it 'value engineering', in that she saw it as effective but not super pricey. Inside wall surface will be simple drywall. 2x6 construction with R15(?) fiberglass. Outside covered with 1/2" plywood, then 1" foam sheets, then "that spirally Tyvek stuff", then adobe. Total will be around R25. Attic will be R54, fiberglass bats, though she said she might start with 1" foam foam against the roof. (Roofing is concrete(?) tiles.) There is no basement, but the house is off the ground. She said the perimeter will be sealed with spray foam. Garage will be either 1" foam or fiberglass, depending on budget. For HVAC, they are going with two mini-splits, each with separate 'heads' for each room or area. Unused rooms will have the temps set high which should keep the units off. There will be an ERV. They are also considering solar, but some time down the road. Five to 10 kilowatts.