Donna, It seems like you are getting mixed information here.
For my money, I would be going back to clear frames, and working from there. It will be very difficult to insulate the walls with the lathes in place.
Did the plasterer explain the plaster and lathe method to you? In case they didn't, I will give you a quick outline. The method predates the current gyprok and earlier fibrous plaster sheeting. Once the house is framed up and weathertight, the walls are covered with thin timber battens called lathes. There is a small gap between the lathes. The plasterers then mix the plaster on site and render over the lathes, forcing mixture through the gaps between the lathes to bind it to the wall frame. To achieve a smooth surface, the wall is trowelled to the best possible finish, and sanded.
In this method, the timber lathes are an internal reinforcement skeleton for the plaster, and there are no external fastenings showing at the face. With fibrous plaster, the sheets are preprepared in the factory and incorporate a substantial amount of fibre internally as reinforcement. Gyprok is a sandwich of plaster mix between two layers of card, acting as external reinforcement. Both fibrous plaster and Gyprok sheets are trimmed to size and then nailed or screwed into place, and then the fixing holes and panel joins are filled with plaster compounds and sanded flush.
With plaster and lathe, the lathes that I have come accross were about 25mm x 6mm, with the gaps between about 6mm also. While the lathe setup would help to lock the studs in place and minimise flexing while the nails were sound and secure, they would do little on their own to brace the wall structure and prevent collapse.
As I mentioned earlier, it would be very difficult to retain the lathes and effectively insulate the walls. For this reason, I would slowly strip the plaster and lathe off part of one wall initially, maybe one third of it's width maximum. In this way, you can find out whether there is adequate bracing and noggins in the framing, or have a chippy confirm this for you. Only proceed to strip the rest of the walls when you know that the frame will cope.
Regarding the vapour barrier, you really do need to have one. The weatherboards should keep moisture out, but they swell,shrink, warp and they rot. Sooner or later, enough moisture will get through somewhere to dampen the insulation or the back paper layer of the gyprok, which will allow the sheet to distort and become weak, and probably pass a water stain to the painted surface. The best way to fix the barrier between the studs would be trim it to about 60mm wider than the stud opening and sandwich it between the stud and a Masonite packer strip, securing with staples at 150mm spacing through the sandwich. Bulk insulation can then be placed between the studs and against the vapour barrier.
Most houses old enough to have plaster and lathe will not have a straight and uniform frame, as in the p&l method, the plaster thickness can vary to hide frame defects. If you gyprok straight over the frame, the sheets will try to follow the contours of the frame and they won't give a flat wall. To avoid this, its possible to batten the wall, and by reccessing the battens into the frame or packing them out as appropriate, you can get the wall to finish flat and vertical. Check the window frame depth when determining your battening strategy, its a lot easier if the inside edge of the window is flush with the surface of the gyprok, otherwise you need to plane down or build up the frames to suit.  | 
