Thanks for posting the photos. Probably the sole plate has been removed having rotted away in the past so the house isn't fully timber framed any more. The remaining timber looks to be suffering. I think you have made a good decision.
It's such a shame. The damage will all have occurred in the last 60 years or so when people decided it was a good idea to waterproof everything with cement and waterproof paints.
What a damn shame. Unfortunately the only way to save that is as Stevers suggests and jack it all up to install a new plinth and mount cills/sole plates on that. Its doable, but the cost may exceed the list price.