Replacing plaster and lath with drywall is a choice based on cost, personal preference, the condition of the plaster, plus mechanical updating needs.
When updating the electrical from knob and tube, adding more electrical circuits, phone and cable lines, and if new insulation is needed, I wouldn't hesitate to replace lath and plaster with new drywall only because I do that type of work myself and save tremendously on labor costs.
Is it out-dated or are old plaster homes considered charming?
When people buy older homes prior to 1978 with plaster and lath, there are new requirements from the EPA (Environmental Protection Agency) they now have to consider about lead based paint removal or containment, it is the RRP program.
Your second question concerning exterior updates on a $700k home near the ocean depends on your budget, whether it is going to be your home, or an investment property.
I would start with an exterior designer or an architect for drawings on an updated style and a recommended material list meeting specifications for the salt water ocean environment.
I wouldn't want to recommend vinyl siding on a $700k home if you can afford beautiful stone, brick, and the variety of cement siding product.
I have found retired architects in my area that still work and are less expensive than when they worked full time to get some preliminary estimates and great professional ideas.
There must be a building supplier near you to recommend exterior materials for you. They may provide you with colored brochures and sometimes samples to show your architect, designer, and contractors.
I've added a few photos at the top of your question just to show how huge the project can be when replacing plaster and lath.
Hope this gets you started Robert,
Joe Trometer
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