Is this a house that you are planing on keeping?
The wood under the vinyl looks rotten. More then likely, the siding was installed to cover up the wood rot instead of fixing it. This is VERY common where I live and it's always just a matter fo time until the wood under the siding completely fails and then it all has to come off to do the repairs. It's an expensive fix that could have been done reasonably the when it first became noticable.
If it was mine, I would remove all the siding, all the damages wood and rebuild. Once you have it rebuilt, then decide on what you want to finish it off. Hardi is very good, but I like the look of the cedar shingles too.
Paying somebody to come in and cover it up again just means that the problem is stil there and it's going to get worse. Rotten wood never stops rotting!!!
Anybody that you hire who says they can make it work with what you have is somebody that you need to run away from. You can do it right, and be done with it, or you can save a buck and do it over and over again.
Good luck,
Eddie