Should I replace old blow in attic insulation with new roll out insulation

The easiest way to insulate concrete block is to glue foam insulation board directly to the block. These boards come in 4 ft X 8 ft sheets and different R values. The other method is to build a wood or steel stud wall along the block to hold blanket style insulation along with electrical wiring etc. This method is a lot more work, but gives you a base to install sheetrock later on.

Depending on whether or not you want the attic area insulated or not, blanket or blown in insulation can be installed into the ceiling. ( this assumes you have a sheathed ceiling). Otherwise, you can install blanket insulation between the rafters. Depending on budget, sprayed in foam insulation is fantastic. You may also want to look at some venting to help exhaust hot air during the summer months. I may add a few comments later, but here's a start.

Yes you can sheet rock with longer screws. However the screws will basically have no hold until they hit the wood. Your previous insulation will continue to shrivel. Your ceiling will sag (glue and screw your drywall to ceilings). And you will be like - "why didn't I prep this for a couple hours so I don't have to redo it." Nothing worse than completing a job and knowing that something you did could (probably will) go wrong.

Also I doubt your insulation is even/flat and I think this would make hanging it flat very hard.

I am all about saving time but if you are in the house for more than a year or two I think you are wasting time.

Also why are you insulating the roof of a detached garage?