I've drilled them no problems, hammer drill not sds and small holes to start with, you'll quickly find out where the rebar is and to avoid it. The raised height wall frame on top will be tied together at the corners and can be strapped with vertical battens as you've said, or some 1" angle or rectangular box section etc. I changed my flat roof to a pitched but it's vaulted (no ceiling), I kept the steel cross members which originally formed part of the old flat roof structure in place just to hold the walls together.
Personally I prefer a slab for the floor but what you suggest would work, just make sure the dpm is at least 150mm higher than the external ground level and protected from damage where it is exposed.
Personally I prefer a slab for the floor but what you suggest would work, just make sure the dpm is at least 150mm higher than the external ground level and protected from damage where it is exposed.