The biggest con is that you will have a lot of work to do with extending the window and door trim. It will also trap all of the moisture that is currently in the wood siding, not allowing it to properly breath. I would seriousely consider removing the redwood siding that you are planning on going over with the 7/16" sheeting for a few reasons.
The first is that this will expose the original sheething of the home, which is probably dimensional lumber installed at an angle or horizontally. At this point, you may not need to put any kind of sheeting over the walls. Just make sure that you properly install 15 lb asphalt based felt paper or a high quality house wrap over the original sheething. I personally prefer felt paper, but you can use house wrap if you want.
There may be some areas where the sheething is rotted that you may need to replace it, but it is probably in better condition than you think. You can then install your siding normally without extending window and door trim and you can flash everything properly without having to purchase or make custom flashings.
I hope this helps. Good luck with your project.