Joining New Drywall to Old: Advice???

I'd like to remove the drywall from the two exterior walls of my corner bedroom, add a couple of electrical outlets while they're exposed, and put 3" fiberglass insulation batts between the studs. This house was built in West Texas in 1959, so it has NO wall insulation at this time. I don't want to use the blow-in or spray-in insulation. Several of the drywall nails have "popped" over the years, which is another reason to replace the existing drywall. The ceiling is insulated and the drywall overhead is OK, so I don't plan on messing with it.
If anyone has any tips for making the joint between the new wall drywall sheets and the existing ceiling drywall look good, please share them with me. I'm somewhat familiar with drywall taping since I put it in a large workshop I built a few years ago, but it was all NEW drywall.
Would it be beneficial to make an incision about 1/16" deep about 2" from the joint all along the ceiling sheets, and scrape out the old paper tape and joint compound from those sheets? This would provide a shallow channel to bed the new tape and it seems it would be easier to smooth out the compound.
I've always used the conventional paper tape; would the fiberglass mesh joint tape be better for this project?
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It would seem easier to blow in insulation - like, a lot easier.
Seams can be overcome with tape and mud, if you feather it out enough I swear you can cover up any seam or flaw.
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Just treat the ceiling like you would new drywall.
You could scrape the ceiling a bit after you remove the wall to remove any large bits or ridges of compound but it shouldn't be anything major. The only time I would try to scrape the ceiling is if its textured. Then it gets a little tough and you will most likely have to retexture the whole ceiling.
Just run a knife along the joint between the ceiling and the old wall drywall. This will keep the paper facing on the ceiling from tearing as you remove the old drywall. That would make it a somewhat major problem to fix.
Any cutting and major scraping on the ceiling will make a mess of the ceiling because you will cut into the paper facing.
I prefer paper tape for corners. Mesh tape just doesn't fill-in the corner just right. I also use a corner trowel. Its great because you can do both sides of the joint at the same time.. It makes a really nice ever so slightly rounded inside corner. I bed the tape with the corner trowel and use just a enough compound. I then remove most of the compound the squirts out with a six inch knife. After this dries a then put a wider coat of compound on with the 6" knife and smooth it out with the corner trowel. the next coat is done with either a 6 or 8" trowel on both sides being careful to not scrape into the corner.

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