You are correct, solid stone walls are designed to breathe but this isn't as simple as it used to be! You'll find most houses have been abused over the years with mortar repairs repointed with cement, living rooms renewed with gypsum plaster (sometimes mixed with asbestos) and painted... So normally the cheapest and easiest option is to make the outside walls watertight with render or cement pointing and allow the solid walls to slowly dry out. BUT this isn't always the case especially with weaker masonary such as sandstone, the golden rule in pointing is that the mortar mix should be weaker than the adjacent masonry. The second most important function is to extract the moisture from the surrounding stone or brick and act as a sacrificial element. It should be placed to encourage evaporation through the mortar mix which is why lime still has its place over cement mortar in some situations
My advice:
Most general builders are ignorant to lime and haven't got a clue - seek a stonemason with experience or do it yourself.
If you are in a position to maintain it in lime, lime plaster and limewashed walls then do so; as its truly a beauty product to work with and appreciate.
If it's an old house and you want to repair some lime mortar, go for a premixed fat lime putty instead of powdered hydraulic lime as its the most flexible and permeable.
If your house has been gypsum plastered, cement pointed and the stone is stronger than the cement with no sign of blowing or cracking and you have pcv windows (limited ventilation) - then you'll probably be leaning towards maintaining that instead and focus on making the solid walls watertight (plus your Mrs won't be moaning because she only has limited limewash colours to choose from
)If you do go down the lime route and maybe natural insulation etc then I highly recommend Ty-Mawr in Brecon; they even offer training courses if you're into DIY (I did consider it).
Here's an update on the lime wall:
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