Insulating foundation walls

[unsinkable]

hey all,
I'm in the final stages of my 30x40 detached stick-built shop, everything is up and the floor is coming. There is no exterior insulation on foundation.
I'm considering insulating concrete foundation walls. Shop is cut into a small hill so only portion of side walls is above grade.
The inside height of walls will end up approx. 4.5' above floor so more than likely I'll end up needing to mount workbench supports etc. to them.

I'm thinkin that I should wrap inside walls with poly (down far enough to go under floor pour) then shoot 2x4's (flat)over, every 4' or so. Then put ridgid insulation between them.
Can I also allow the ridgid insulation to be lower than floor edge ?
Will this be good for floor expansion, or bad ?
Thoughts ?
Pretty straightforward, but here's a pic...
Thanks !

http://i115.photobucket.com/albums/n297/kVARS/garage/E8DAC9E9-4592-4F36-A38D-5D212CD4534A.jpg

 

[Denwood]

What is the plan for your floor? That would factor into my suggestion.

 

[1949 caddyman]

Can you put the rigid foam on the outside of the concrete wall? If so you could cover any above grade with cement board.

 

[unsinkable]

I planned on only using a sealer/hardener on floor, with a lift mounted in "high" bay.
Digging in this area was AWFUL, lots of stone, it was bad enough with excavator, and the one I borrowed isn't available now. With my back injury I'm definitely not hand-digging outside of walls.