How to insulate tricky ceiling corner join

[sb1202]

I've just stripped back the walls in a small hallway to discover that the cornice in fact a strip of plasterboard pinned to the rafters. (See the images)  This leaves me with a dilemma as I'd ideally prefer to build new stud walls and have 90 degree corners but I can't afford to bring in the walls and lose floor space because the hallway is only 850mm wide as it stands. 

 

If I build the stud wall and bring it up to the rafters, this leaves a cold void, so the simplest solution is to pack the rafters with more wool insulation and lay it down as in the 3rd image. The problem is the rafters will still be a cold bridge if I understad it correctly. That being the case, would it be ok to infill the sloped part of the ceiling join with some insulated plasterboard?