Is blown-in insulation appropriate for on the foundation block in a crawlspace?
Since it's vented outside, the humidity level in the crawlspace is generally going to be equal to the humidity level outside. You should not have any vapor barrier on the walls, as this will actually prevent drying and hold the moisture in (though because it's vented, it will still eventually equalize).

What you should have though, is a vapor barrier and insulation on the roof of the crawlspace, before the subfloor of the floor above. This is an area where cold (air in the crawlspace) meets hot (from the conditioned room above), and so there needs to be a thermal break (insulation) and a vapor barrier on the warm side of the insulation.

I suspect the insulation in the crawlspace itself is just to help slow the temperature changes in the crawlspace, because that's about all it's doing. Considering it's open to the outside, it will eventually get to the outside temperature. Expecting it to add any insulation value to your living space is about the same as leaving your front door wide open and expecting the insulation in the rest of your house to keep you warm.