I'm in the process of converting the attached garage into living space and I'm going through and replacing all of the 1950's insulation with new insulation. I'm now doing around the back side of the fireplace and I'm uncertain as to if I can insulate certain portions of it. In the image below I have two inches between the fireplace and the stud designated with a '1'. From what I gather I don't want to insulate between that. Between '1' and '2' can I insulate and if so what kind of insulation is ok to use? Between '2' and '3' there was existing insulation that I will fill in.
Thanks ahead of time to anyone who takes the time to answer what may seem like a very simple question.