I thought I would post a couple pictures of the finished product. Between the posts on this thread and the conversation with our inspector I decided to stuff insulation in at the top plate and I used a combination of 5/8" and 1/2" drywall to provide blocking every 10' horizontally. Here you can see some of both.
It's not pretty, but it works. I also caulked the gap between the foundation and the DW with some fire rated caulk.
Here you can see that I added a strip of DW around the top of the wall so that I can seal the first layer of ceiling DW. Normally this would not be necessary, as the first layer of ceiling DW would butt against the top plate, but because I had to fur down my ceiling, my DW was just a little lower than the top plate. No worries, this did the trick.
Finally, here's a shot of a section at the back where the top plate is buried further up into the ceiling. I cut some 2x6s to fill the gap and give me something to seal that first layer of DW against. It creates a sort of pocket, but the top of the wall ovelaps the foundation and my blocking is butted against the top of the wall.
Once you understand what you're trying to accomplish, this whole process becomes a lot simpler. It probably took me 2 hours in all to finish this up. Although, it would have taken the framers much less time to do it when they were building the house
Hopefully this will come in handy for someone else.