Your decisions may depend on where the tree is. If it is located in a community with an ordinance against diseased trees, it will have to come down. Also, if it falls, it could damage people or property. You could cut the smaller limbs off the tree and debark the remainder, but that would be extremely difficult.

Plastic tarping will not work because the beetles can emerge from even one small hole and infect other trees. There are no registered pesticides for killing the beetles as they emerge. Also, wrapping it in plastic would make the tree unappealing to wildlife.

One suggestion is to use an air chisel to remove the bark, but it is next to impossible to remove all bark from the tree. The bark dries tight to the stem and is very difficult to remove. You have to ask whether the value of the snag is worth the effort.

Your intentions are good, but there are other ways of providing habitat that are perfectly acceptable. Have the tree taken down and disposed of, and then use plantings of shrubs, ornamental grasses, and perennials to provide refuge. If birds need a taller tree to nest in, they will choose one with leaves which help hide the nest.