There are some head bangers here, he is one of them. It is amazing. People come here and ask advise and some actually believe him. I am a heating pro BTW. Any mis-information I pounce on. The know-it-all amateurs are mainly cranks.
Even the Collins DIY book recommends this.
The house is designed to distribute its weight downwards, not sideways. Foam insulation that is for underground use is very rigid indeed. Some houses are built of it and the centre of the foam poured with concrete. It is not the stuff mattresses are made of.
No. see above. In areas of high water tables they put gravel next to the foundations to keep the water away from the foundations. It drains away quicker.
Many people have paving slabs or stones around the edge of the house. This means the foam insulation can go up to slab or stones level. Also it is best to have gravel between the foam insulation and the earth as this keeps water away from the foundations. So you can kill two birds with the one stone. Best do it in stages of say 2 metre lengths at a time and work your way around the house. Assuming you have a solid floor of course.