I am renovating our 3rd floor attic into heated living space. Our chimney only serves a fireplace that gets very little use, maybe 5 times a year. It has been sparged, i.e. the outside was covered with some kind of mortar by a mason. We are putting a wall around it using metal studs and blue board. Should I insulate the wall with fiberglass batt insulation to reduce the heat loss to the cold chimney?

As long as the mortar has no flaking/cracking or otherwise is in good shape, ie:not allowing the fumes or possible spark from exiting the entire structure, I can't see why not.Perhaps a building inspector could be contacted to address this in person(and if this is a coded project), better to be safe than sorry.

Insulation could be anything from the batt's to Styrofoam and many others, perhaps a layer of drywall between the brick and the metal studs would work too?