The Upper Portion of the Chimney Dry Rot Repair
My first guess is to remove all the wood framing from behind the masonry. Luckily, this is not a load bearing wall but I would be losing about a 3′ or so strip of sheating up the end of the house, thus losing some shear capacity in that wall.
For the fix, I am thinking of using 2-1/2x16ga metal studs to frame in the area behind the stack. To maximize air space, I am also planning on leaving out the insulation in that area. The choice of metal studs is mainly driven by a higher stiffness factor while allowing more space between the masonry and the inside finished wall.
I am wondering if ‘X’ bracing this new framing would be worthwhile in order to provide some degree of shear capacity in the new framing. Or, perhaps set the face of studs back 3/8″ from the interior and merely put the shear membrane (plywood) on the inside rather than the outside. Or …. since the house has stood for who knows how long in its present condition, if it is even worth worrying about???
In addition, I am concerned about what to put over the masonry as a vapor barrier on that side. The fireplace will be used quite heavily in the winter, so whatever goes on it would have to be somewhat heat resistant since the stack would get at least warm, if not hot.