I'll likely not proceed with it, but I was curious to read in Building Science. com that dense packed cellulose could be used for insulation fill in the stud space of the insulated basement wall system. I would think, it would only be possible in the system where extruded closed cell foam insulation is sealed up directly against the wall surface and then the stud frame structure is built inside of foam envelope. Also, this would be possible, only if the cellulose was left to dry totally before being covered with drywall or other finish.