Will IR show decay in...

Log walls?

If there are surface temperature changes associated with it.

Density will effect thermal capacity and it will show up. It is not likely that you will know what your looking at through the camera though. Wood knots show up for the same reason.

I’m sure there may be better tools to evaluate this though!

Ken,

The IR camera measures the surface temperature.

The log may have moisture reaching the surface that is at the stage of evaporation
and would be cooler than the area around it, and this would cause the camera
to see this difference in temperature (delta-T).

If the moisture was at the same temperature as the surrounding surface, then
the camera would not see it. Buy turning on the heat or AC you might be able
to change the interior temperature from the exterior and thus cause the
moisture to show up on the cameras image (maybe).

If the decay is dry, it would be the same temperature as the rest of the
log and the camera would not see it. If the density of the log causes the
log to absorb temperature at a different rate, then some areas would
look differently on the cameras image.

Just some food for thought.

Trying to see the logs from the outside in the sunlight would be difficult
because the solar energy would saturate the logs with heat. The wind
and clouds going by could have an some affect as well. If there is moisture
deep within the log, it would be difficult to see any difference coming
to the surface. There are a lot of factors to consider.

You might find more information about the logs by pounding on them
with a mallet and listening to the sound that they make and then
look for defects in the areas that do not sound right.

See Kenton Sheperds video on log homes.
http://www.nachi.tv/episode5