I think the main problem with the shavings is they are not fire retardant, in fact they are excellent kindling. As mentioned before, the insulation is the crux to a wholly organic home. It does make sense in an older structure though, after the construction of the frame, and all the hand planing and shaving done to sheath it, there would be a mountain of shavings.
My current plan when I build will be to sheath the house in boards, then put rigid insulation on, then put clapboards on the outside. This is still a couple of years away, so I have plenty of time to weigh my options.
Dave
