Insulation ?

[Buzz-sawyer]

Paper has better insu power cause of the air trapped in all the little pockets,
so the fluffy-er the sawdust the better...in using it in walls an uniterupted vapor barrier would prevent moisture from the inside....could easily treat the dust with insecticide as well
Spread
Spray
Dry install
reason it isnt being used...newer better materials exist
It has been used in the past extensively...including homes

[mur]

The main problem with sawdust is that it settles with time.  Compacts down at the bottom - not much insulating value there and then almost no insulating value in the void at the top of the wall.  The old sawmill cabins around here used it back in the Fifties and the walls were half empty of sawdust 20 years later.  It had settled.  

[Don_Lewis]

Actually none of the open cell type insulations, sawdust, cellulose (ground newsprint), fiberglass, mineral wool, expanded polystrene etc. are good to use in a wood frame kiln. As long as the dewpoint falls in the insulation and it is open cell, it will get wet. You can slow it down with an effective vapor barrier but there are few perfect vapor barriers.

[FeltzE]

Sawdust

Pros:
Cheap
Plentiful

Cons:
Needs to be dried for best R value
Needs to be protected from moisture Bagged or Wraped
Fire hazards
Settling