Thanks all for the insightful input. I ended up taking the splice and scab 
approach. I used wood glue and plenty of screws on both sides and PT lumber. 
Just below the ceiling there is a one by oriented in an upright podition which 
sits in a notched recess in the stud. The  second story floor joists then are 
affixed to the stud and rest on the one by. I extended the scab up to this one 
by so some level of floor joist support is gained. As far as blocking for fire 
protection- there is no point since the ceiling is the floor with exposed 
joists. Not a very significant structure but it does have charm. A very typical 
1930s Maine cottage with a whooping 600 sq feet!

Sent from my iPhone

On Apr 10, 2013, at 12:18 PM, Peter Hertzing <phertz...@gmail.com> wrote:

> Yes this was common practice for many years.  Use treated lumber, which is
> relatively cheap, so a little overbuilding is fairly inexpensive compared
> to the risk being averted.  Good Luck
> 
> On Wed, Apr 10, 2013 at 11:05 AM, Brian Toscano 
> <brian.tosc...@gmail.com>wrote:
> 
>> Lots of old homes built this way;  surely they do not expect the owner to
>> bulldoze the house and rebuild for such a repair that is fairly common.
>> 
>> 
>> On Tue, Apr 9, 2013 at 9:19 PM, G Mann <g2ma...@gmail.com> wrote:
>> 
>>> What you have described is known here as a "balloon framed" structure,
>>> which BTW is not allowed by building code anywhere I know of if, as you
>>> describe, the studs are two story.
>>> 
>>> The fix you propose is less than an perfect fix, but likely your only
>>> option.  I would suggest you clean, glue and clamp the sister stud onto
>> the
>>> solid portion of the existing stud with good overlap to engage as much
>>> structure as possible.
>>> 
>>> Also.. check your local building codes to see if such repair is allowed..
>>> Might be an insurance concern?
>>> 
>>> Grant...
>>> 
>>> 
>>> On Tue, Apr 9, 2013 at 7:14 PM, <dsereta...@yahoo.com> wrote:
>>> 
>>>> I have a "cottage". Really it's a tiny thing that resembles a large
>>> shack!
>>>> I've been doing some sill repairs but some of the studs sitting on the
>>>> rotted sill have rotted as well. I was thinking about cutting out the
>>>> rotted bottom section,  splicing in a new piece of stud and then
>>> sistering
>>>> it all up with another 2x4. Does the sistering stud have to reach all
>> the
>>>> way up to the top plate? I can't realistically do this because it
>> extends
>>>> through the ceiling into the second floor. Any thoughts?
>>>> 
>>>> Sent from my iPhone
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