Vapor barrier on bathroom remodel?
In the Pacific Northwest you do want an exterior vapor barrier we get enough wind driven rain that this is a big deal.
The original insulation sounds like a cellulose type, I have never used on new construction, by 79 fiberglass was the common type for new construction in this area.
I have always used heavy plastic behind my backer so I don’t have any experience with flexstone. as I have always used a membrane behind backer because I don’t want the constant moisture that can penetrate grout and backer or even tile depending on the type a non permeable surface there but still a vapor barrier on the exterior wall. Try to overlap and make sure to go up to the eves so water can not easily get behind it and damage the sheathing.