Whether or not something is bad for the environment has nothing to do with whether or not it is science. Also, the environment/climate will do just fine with heaps of CO2 and rising sea levels. Whether particular species (such has humans) do okay, is a different story. CO2 does not cause climate 'breakdown', it encourages climate change. I'm not sure what it would mean for the climate to 'break down'.
The question that matters here is what is worse for the environment (in terms of human-preferred environment) between the polystyrene and the (likely tiny amounts) of CO2? Turning something bad into something less bad is still a win.
I mostly agree with what you said, but
Little nitpick - houses are held together with nails because they are good enough and are cheaper than screws (slightly in manufacturing costs, and hugely in time spent during construction). Screws would be a lot better, and also make dismantling sections a bit easier.
"Money is the root of all money." -- the moving finger