How to cover exposed attic wall insulation

Since you are in zone 4, R-38 is a reasonable insulation level. That doesn't tell us how much an issue a lack of vapor barrier is. It is less of an issue in dry climates. What a barrier does for you is prevent moisture from condensing inside the insulation, significantly reducing it's insulating value. Ever notice how hypothermia victims have invariably gotten themselves wet? Unfortunately, properly installing one can be very difficult (read: expensive). As it happens, plywood acts somewhat as a barrier, depending on it's construction. Thus, you may need to just focus on gaps and openings.

Another possible make-do vapor barrier is a good heavy coating of latex paint on the ceiling. You may already have this! Truth be told, the best way to insulate would be to remove the plywood and blow in the needed insulation. This gets sealed around all the joists and other ins and outs nicely and makes effective use of what little insulation is already there. However, it may not be worth the effort.

You can still get a good insulation job by layering it on top as you suggest. The draw back is the dead space under the plywood effectively becomes part of your conditioned space, greatly diminishing the value of what's there. Even a plaster ceiling alone is worth something. And you've increased the top story volume you're heating 5-6%. Another issue with this approach is the plywood becomes your vapor barrier. What are the ramifications of moisture condensing on the under side? There's poor air circulation, so it will not dry easily. It could be the cause of a mold colony gaining a foothold, which can have serious health consequences. Or it may not be an issue if you're in a dry climate.

Whichever way you go, try to ensure what ever passes as a vapor barrier is a complete as possible. Ensure any recessed light fixtures are not insulated over, and that no insulation contacts the cans. It may seem more efficient to cover them, but you greatly increase the chance of them overheating and starting a fire. Insulation is little good if your house burns down! A truly efficient ceiling has no recessed light fixtures for this very reason. Note that there are supposedly fixtures rated to be covered, but I don't think I've ever seen one.

I own a cape with two finished bedrooms upstairs. We have knee-walls like you, as well as a cap space above the rooms (your upper attic).

We had both the crawl spaces (lower attic) and cap insulated. At the time, we were told there are two types of attic insulation: hot roof and cold roof. In a hot roof, the insulation is attached against the roof between the rafters and the air in the attic is considered warm. On a cold roof, the floor of the attic is insulated, making a warm ceiling, and ventilation and circulation occur in the attic itself (air comes in through the soffit and rises to a ridge vent or other ventilation device).

Ventilation is important for your attic and roof, so you'll want to be careful what you block up.

In my house, we used blow in insulation on the floor of the cap, and we used batting and foam board in the crawl space. You'll want to setup a ripping station outside, and you'll cut the foam board into lengths that fir through your crawlspace door. You carry them in in pieces, nail them to the rafters with special nails, and then use insulating/foil tape to seal the seams.