Walls – Faced or unfaced insulation

Since you're going to have the walls open, I would use pre-faced fiberglass batting. The rolls give you more flexibility than the pre-cut batts if you have non-standard height walls and they're usually a little cheaper per square foot, but I see special offers in the big-box stores all the time so shop around.

There's no special trick to installing it, but wear a dust mask that's rated for fiberglass dust. The vapor barrier goes on the warm side. I usually cut pieces to length before installing them in the wall (but I'm an engineer and can't help myself! :), but you can cut it to size while it's in the wall if you're not as OCD as me: put the loose end at the top of the wall, unroll and stuff until you reach the bottom then cut it off. Run a bead of adhesive along the stud, then unfold the flaps at the edge of the insulation on one side of the stud and press into the adhesive. Repeat for the insulation on other side, then staple the two of them into the stud. Tap the staples in with a hammer if they didn't go all the way. Done!

I don't have a book recommendation, but it's easy to learn how to do it.

Any high humidity area like a bathroom should have a good vapor barrier under the sheetrock. This barrier should be taped at the seams and ceiling forming sort of an air tight cell. Usually a kraft backed insulation is not a very good vapor barrier and has lots of gaps. To be on the safe side and avoid any condensation between the 6 mil and kraft, you could simply remove the kraft backing or cut several slices in it top to bottom. Usually it will not cause a problem unless you live in a very wet humid climate or the plastic is not sealed properly. The 6 mil is a much better material for your purpose than kraft backed.