Before you worry about insulation, you have to compleyely understand what you are doing to the structure of the house. The ceiling joists that would be removed are holding the outside walls from pulling apart. So you have to figure out how you are going to hold the house together. You will be adding cross ties across and create a new ceiling some what higher than the old one. To add insulation to the sloped part of the roof, you will need to add height to the rafters for insulation. You want to have an air space between insulation and roof sheeting. Between this area and the rest of the house you just build a 2x6 wall from the top of the bedroom wall to the roof, insulate that and drywall the livingroom side.