Windows on Washington wrote:
While a full tear out has it application value and does give you the most amount of glass back, it is not always necessary and most customers are not prepared for the added expense of new interior trim, stool, and misc carpentry work.
Exterior trim is not structural and can easily be replaced without necessitating a full tear out.
If you are going with a full tear out, you would be advised to go with a new construction window, cut back the siding, and flash the sill/jambs/head. Wood siding is notorious difficult to get sealed up properly and needs very special attention.
95% of the rot that I come across is on only the brickmold and sill nose. At worst, there may be some on the sill, but that can be spliced in. That exterior trim is not structural at all as WoW mentioned, and an insert can still be installed effectively (rotted areas can simply be cut out and patched in, or full replacement of exterior trim/brickmold if desired).
I agree on the second point as well, if you still desire to get a full tear-out, cutting back the siding would be advised in your application in order to properly flash the opening.