Hi Tim,
I commend you for removing all the "coverings" on the walls to do a better job of assessment and the remedial work to come. OPC...especially modern versions of it...are generally a nasty lot of work in my experience...When it begins to fail there is little that can be done. OPC is not the "magic solution" to so much as, so many believe it to be...and has very limiting parameters of actually being done well that most that do mix and use it...do not...do it well...which is what you seem to be now facing...
I can say before asking some questions I need to further help...clay plasters over OPC is a NO GO...it is not a matter of if...but when it will fail...
If this is to be "sleeping space" of your children, I agree you will need so source of finish, but "waterproofing" concrete is nothing more than a "band aid" over a "bad infection." You may not see the rot...and it may go on for years...nevertheless...the decay will continue until the moisture issues and drainage is dealt with. I have seen this so many time in my career that it saddens me each time I come across another case...I have some in my own area that insist on every "quick fix" and "waterproofing-tanking" method they can find (or get sold to them.) If they had just "bitten the bullet," and dealt with installing proper drainage they would be done and not still spending money...Some now have health issues from the mold and/or chemicals used in the "tanking solutions."
If you have any type of routine high moisture/condensation, and/or flooding in that basement your only choice is proper drainage...
Concrete (OPC) in general facilitate moisture migration effectively, and allowing that back into the house...even in "small amounts," as you have suggested is the least desirable solution possible. There of
course will be some...but this should be relegated to a minimum. As for it being "dirt cheap," it will all depend on your desire to do a lot of hand digging and/or other invasive means to facilitate better
water management around the foundation.
In the interim...a lime wash (several coats) is going to be your very least expensive solution and perhaps do to fiscal burdens your only one at this time...
With a circa of 1919 I am not sure if this is all concrete and not roughly parged stone? Either way if you have your heart set on cobb work...you are going to have to put at least three coats of lime plaster on the walls...then...create a minimum of a 70mm dead air space with more studwork and fill in with a "light straw clay" cobbing method to clay plaster over...This will give you the "affect" you are looking for, add some thermal resistance to the "dank and cold" while still allowing the concrete to "sweat" without effecting too terribly the bedrooms.
I must suggest that this space is much better suited for a "root cellar" than a living space from the sounds of it...?
Does the cow manure really make that big a difference in durability?
In some forms and application...absolutely...for interior work not so much, as it is a binder for mainly exterior work (but not always.)
I will do my best to address any and all your questions...
Regards,
j