Not a problem ... can be filled.

"Suggestions on what to do with the blown-in insulation holes?"
No, wood filler will not hold up. They also make plastic plugs for the purpose, but they are pretty ugly.

2 methods:

1. Buy a wooden plug cutter in the size of the holes (usually 1"). Cut as many plugs as you need of a good weather resistant wood that is easily sanded (cedar or redwood). Apply wood glue to the hole and plug, tap in, let dry, sand flush.

2. Replace the siding rows that have holes with new cedar siding of the same dimensions.

3. Insulation settles. Think about blowing some more in before you plug 'em.

Your house is looking beautiful again!

A thermal camera will tell you if the bown-in insulation is of any value. (Probably not.) As noted above, use solid wood plugs, not filler.

I used wooden dowels and caulked around them. You can barely tell they're there, plus the wood had visible knots anyway so it looks natural.

Thinking at this point that we will use dowels for some of the holes, but there are a few boards that literally have 10-12 holes in one board.
Would it be terrible/horrible to replace a few pieces of clapboard? Guessing it's cedar?
Sarah

No, nothing terrible about replacing a few pieces of clapboard.

Make sure the dowels have a very snug fit, they should require a light tap or two with a hammer. Make sure you have a soft wood for sanding or you'll forever regret the work involved in fairing up all the dowel plugs.

Otherwise, buy the plug cutter...

Here is a link that might be useful: Example Of A 1

put in wooden plugs to fill the holes,