You add the straw to the clay plaster, not plaster over loose straw. The straw addition has been proven to pass moisture better (increase perm rating) than clay alone and stiffen it, and it increases the insulation value a little, not much. Straw is only a really good insulation and a moisture manager when it's density is between 5 -12 PCF in a tied bale, more insulation at the lower on the order of r-30-50. I would not expect as good performance out of a loose fill, or batt. The bale pore size plays a large benefit for vapor diffusion and drainage, one of the best out there if you don't mind the large footprint on the ground.
Here are some properties:
http://www.ecobuildnetwork.org/images/PDFfiles/Straw_Bale_Test_Downloads/moisture-properties_of_plaster_and_stucco_for_strawbale_buildings_straube_2003.pdf
Paramount Natural Design-Build Architect, Engineering Services, GC, LLC.