Personally, I wouldn't do that. I WOULD rip off the old siding, but I wouldn't nail the new stuff directly to the studs. If it doesn't already have it (which it should), I would install plywood or some sort of firm insulation board between the studs and the new siding.

 

You have to install a weather resistant barrier ( kraft paper) over the studs before installing the new siding. You will need a 2 inch minimum overlap horizontally and a 6 inch minimum overlap vertically.

 

I left my T1-11 ON, why take off a good layer of sheathing?? I thought of it as a good time to slap on a 1/2" of poly styrene (sp?) sheet insulation before the siding guys got there. (mark your studs or hang it in accordance with the 16" markings already on the sheets).
I forgot we are talking southwest here, up north we'll take any chance we get at adding some insulation, not so important for you I suppose.

Whats wrong with pressure washing the siding and getting a good coat of stain or paint on it, is it rotting?

BTW, use Tyvek or other brand housewrap and tape it to the windows and doors before they install the J.