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Exploratory Surgery
To confirm our suspicions that the lack of head flashing over the windows was the problem, we pulled off the wood trim around the window with the worst staining (the one you see in picture 6). Here's what we found. The OSB was completely shot - I could stick my finger through it. The black is rotten wood, the white is mold. Yum.

At this point, we decided the best course of action was to remove the stucco, repair the damage, and reside the house in Hardieplank fiber-cement siding. We hoped this would keep the historical look (it looks like wood clapboard) but eliminate the moisture intrusion problems with the stucco.

We got a bunch of quotes and ended up going with a builder who was going to charge $30K for removing the stucco, installing the Hardieplank, and replacing all the wood window trim with Azek (a PVC composite material that looks like wood but doesn't rot). Any sheathing or structural repairs would be done at additional cost for time and materials.
"You can also see that the window opening was not wrapped properly with the tyvek or house wrap as is required for all sidings but especially stucco and eifs. The wrap should totally enclose the opening and wrap inside the frame prior to the window being installed." --scott b, 10/13/06
Panasonic DMC-FZ1 Full EXIF / IPTC
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