Loose-fill insulation like you suggested, newfangle, has been tried. It settles over time, leaving half the wall uninsulated. Sometimes attics get blow-in insulation, which is easy to do, but for a number of reasons it can't beat fiberglass batts.
But speaking of gardening, extruded polystyrene, when broken up, is a great soil additive. It loosens and aerates the soil, without adding weight as sand or gravel does. I use it at the bottom of pots. Big landscaping companies sometimes lay huge volumes of the stuff to build-up green areas over underground facilities like parking lots. Pelletized, it is similar to pearlite or vermiculite soil additives, and will make planter boxes or hanging baskets lighter.
Lawns are already becoming less popular in Vancouver. Most home-owners appear to be too ambitious - they convert half or all of the lawn to plantings, then don't have time to maintain it. There's nothing natural about bindweed choking out a small cedar. I'd say less than half the soil in my neighbourhood has grass on it.