When we first built our school in Ladakh 20+ years ago we didn't use any modern insulation materials in our passive
solar heated buildings. In many rooms, especially bedrooms and rooms where we'd be sitting on the floor, we got sawdust and shavings from the
local lumber yards, and laid that down under floor mats. It was a nice low-tech method, and did make a soft layer. Over the years, it proved to become lumpy and bumpy, and eventually hosted various bugs that eat wood, paper and jute mats, so we've gradually removed it (and added it to the composting toilets). We also had a lot of dust, but can't agree on whether that is coming up from the ground or coming in from outdoors. Some sawdust floors, we replaced with wood plank flooring with gravel underneath. In some rooms where we sit on the floor, and have slate or earth under the mats, we lay closed-cell foam that we can buy in big rolls under the mats, but after a few years it becomes a big piece of garbage. We used crumpled waste paper in a ceiling for insulation, and the
mice just LOVE living in it.
We have excellent solar gain all winter so we can afford to have imperfect insulation. Our rammed earth walls provide
enough thermal mass so we don't depend on the floor for heat storage.
The point of the horizontal skirt insulation is that the heat moves through the solid ground at a slow pace, so even if the insulation is horizontal, it will protect the heat in your subfloor somewhat. But you'll still be connected to the deep earth temperature, which is probably lower than you want in your house; in our area it's supposedly 5C.
If you are going to make a wooden plank floor, then the insulation doesn't have to bear any weight, so you can use any insulating material that you can get. I recommend that you think about how it might get eaten by or host bugs or mice, and whether it might decay or settle. For example, wool, discarded clothing, and waste paper are good free or cheap materials but may host bugs or mice. Mineral insulation avoids those problems but isn't cheap.