Homer said:I'm contemplating the same thing here in Indiana. We have an old farm house that is pretty small, with an old farmhand bunkhouse/canning kitchen out back. It used to have a Kerosene furnace in there, but I couldn't revive the thing after taking it completely apart ('couldn't find parts for the 1940's model I had).
Anyway, I'll be stripping off the old rotting wood siding from the outside, filling between the studs with 4" high density foam (R value much higher than the pink fiberglass), and putting up new siding outside. The inside boarding is still in pretty good shape ("lapboard interior of sorts), but I'll probably put up a vapor barrier and 3/8" plywood (or other suitable cheap panelling). If I can get up into the joists on the inside, I'll either blow in foam or put in some pink stuff there (2-3 thick).
Since I have a concrete floor, I'll put down some rubber cow pads to keep the constant 50 degree temp from dragging down the temps in winter (probably not an issue with you). Finally, I'll have a window AC unit and an electric heater (a big baseboard unit) hooked up to a standard thermostat to regulate temps.
I'm also considering having the tanks built into another cabinet to keep any temp swings from being likely. Anyway, these are the current plans, but we'll see how it goes. I won't put anything outside until I take it through one full winter/summer cycle to ensure that there aren't temp swings.
An electric base board heater is safer than the typical space heaters. You might want to check that out. I don't know what the prices are on new ones, but I have an old one that was given to me. It's not super fast at heating, but it puts out an even heat and does not get up to temps that worry me.