Can't help with the attic vents.
I'd use drywall on the ceilings, and either 1/2 or 5/8 ply on the walls. In general, fire codes that prevent plywood walls are for residential and commercial structures -- but check with the local building inspectors. You might also want to check with your insurer on this, since wood walls might cause higher fire insurance premiums.
But I have plywood walls in my shop, and I love that I can use screws to hang anything anywhere.
As for insulation -- use the most/best that you can afford. Energy will never get cheaper, only more expensive. And wood will never lose its propensity to absorb moisture, and swell, then lose it and shrink. A climate controlled shop is inherently better at producing quality pieces -- good insulation will have a positive effect on your work.