Sunroom Conversion - Question for Appraisers

[Steven Straughn]

I recently purchased a SFH as my primary residence and will be renovating it over the next 2-3 years. It's a 4/3, 2,161 square feet, 2 car garage (extra deep), 8,125sf lot.

My question concerns how to convert a 370 sf sunroom into living space. It currently has block walls 30" high, and windows all around. Ceiling is 7' to the bottom of the exposed beams. See pics here: http://s99.photobucket.com/user/Steve_Straughn/library/Jackson%20Drive?page=1

My assumptions are that the walls and ceiling would need to be insulated, all electrical would need to be inside the walls, and the finished height of the ceiling would have to be 7' or higher. Is it possible to install 2x4s on their side over the block with 1.5" rigid foam insulation? Can the electrical be run through conduit in that space?

FYI, windows will be replaced with dual-pane, and we'll get rid of some of the ones above that little table. Also, we are considering vaulting the ceiling to match the rest of the living areas.

I'm sure all of this information can be found on the internet somewhere, but I figured I'd let all of you knowledgeable BPers show off your smarts.