That's the right way to do it actually, but you have to ensure there is enough ventilation space between the Tyvek and the actual cladding. Why use larch, that's expensive stuff (at least here in Finland)? Tyvek and the vapor barrier actually do different things:
- vapor barrier keeps moisture out of the insulation, by not letting (the presumably warmer and moister) air enter the insulation.
- Tyvek lets moisture (in gas, i.e. moisture in the air) OUT, but does not let water (in it's liquid/solid shape) enter into the insulation.
In Finland (and Sweden) we user normal spruce/birch for the cladding, but we paint it then (usually). That works pretty well, even with Latex paint - AS LONG as you have sufficient ventilation gap BEHIND the cladding, typically minimum of 20-20 mm - of non-restricted air flow. In certain sense that is a fire hazard, but it required to keep the cladding healthy - paint cracks eventually and the moisture that gets into the wood can ventilate/dry out from the non-painted backside of the wood.