Remodel Planning - working with or fixing present issues
Issue #1: Yes, you are correct. Those older, larger, joists (even using Douglas Fir - Larch species and Select Structural grade) they DO NOT meet the current structural code. 

If I did my calculations correctly, they barely meet code (40 psf Live Load plus 15 psf Dead Load) for a 12’ span. You’ll need to add additional floor joists. 

Issue #1.5: The tapered bearing end would be acceptable, if 1) the joist has full bearing, and 2) the roof slope is 4:12 or greater. (If it’s a low slope roof then more of the joist is cut and removed.) BTW, does that make those joists ceiling rafters and not floor joists with the roof sheathing in that arrangement? If so, your rough 2x6 at 16” oc spanning 16’ is acceptable. 

Issue #2: Another way of solving the no sill plate issue is to install a pressure treated ledger bolted to the existing concrete wall, rather than cutting the existing concrete wall down. Lift the joists up 1/4” and clip the joists to the ledger. Then install blocking and nail the exterior sheathing to the blocking for shear walls. (Where you live, you’ll probably want to add exterior wall sheathing for your seismic resistance.)

I’m sure you have other issues too: 1) energy code, 2) tempered glass, 3) smoke detectors, etc. 

1) The Energy Code will require 2x6 exterior studs so you can install 6” insulation or you’ll need to install and exterior layer of rigid insulation...or you could install a super efficient heating system to off-set the 4” insulation. Also, thermal pane windows, etc. 

2) Any glass within 12” of a door or 18” of the floor will need to be changed to tempered glass. 

3) Smoke detectors are required outside sleeping rooms.