Sorry for the late reply.
The second parameter is a boolean, and corresponds to the "override data" checkbox in the Insert File dialog box. If this is set to True, some data in the host drawing may be overwritten by data in the inserted drawing. Also, your original paperspace may be replaced by the default paperspace in the file being inserted. If it is set to False, a new paperspace is added (perhaps more than one if the drawing being inserted contains multiple paperspace layouts).
I'm not seeing the workplane switch that you describe -- could it perhaps be related to your AutoWorkplane setting?
Since it's not entirely clear what data may be overridden if you set the second parameter to True, I recommend leaving it at False.
A procedure that seems to work for me is this:
1) Store the current UCS
2) Store the current Paperspace count
3) InsertFile(filename, False)
4) Get the new Paperspace count, and delete any new acquisitions.
5) Restore the original UCS.
I am attaching a zipped VBScript and some sample drawings to illustrate.
InsertFileHost.tcw is the file you want to have loaded when you run the script.
Mesh5x8 is just a "dummy" sample drawing to insert using InsertFile.