Why Kentucky Blue----with nothing else to counter its deficiences---which are many.

Many people avoid using what will solve the problem just because they have this idea that "organic" is the only way to go. You can take a lot more time to kill what weeds you have---and end up being disappointed with the end result or --you can take the problem and solve it more in line with the amount of time you wish to put to it.

RoundUp, will kill the green in your lawn...and anything else that happens to be there. If you feell such additional greenery is felt to be too valuable to lose, then using the glyphosate is out of the question...but it is the only way to rid your lawn of what you don't want there.

However you decide to level it, it does sound like extensive tilling is going to be required--bumps cannot be just pushed down or leveled by raking.
A small tiller can do a somewhat decent job of removing hillocks, then raking to level and rolling where necessary.

As far as seeding, do look into the use of a combination grass seed...60 percent Kentucky Blue, 20 percent perennial ryegrass and 20 percent fescue--makes for a tough lawn that can stand up to most conditions encountered in north-eastern weather patterns. Do some research on the different types and what they can offer a lawn. I'm sure you will select the combo instead of one type.

KBG is a great cool season grass and a pure KBG lawn is one beatiful lawn, they have very good wintering characterstics and have the ability to survive the heat of summer (with some moderate attention). It is slow to germinate though. There are other grasses that can be mixed with KBG, but they can have problems with winter survival. tiemco knows a heck of a lot about KBG and TTTF and when/how to plant them, so if he has something to say about either, you can make book on it. I also recommend you get your seed from a seed specialty provider. I have no advice for the organic removal of weeds--maybe cover the lawn with plastic and sterilize all of it. If you do want KBG, I've found the best source for seed is the local sod farm. Some will sell bags of what they are sowing and not only do you benefit from all their experience in cultivar selection for your area, you get to see what a stand of it is going to actually look like.

I think vinegar may be a viable option to kill off the heavily weeded areas. Not everything in the yard needs a complete makeover, and I am not really going for perfection. I don't mind hand weeding or spot treating the yard after it is established to push out more weeds. A few dandelions here and there are pretty. :)

The back yard is our main "play turf" so to speak. My 2 1/2 year old daughter uses the area daily. We also have plans to add a deck to the back of the house next year which will increase our use of the back yard.

Timeco, some important characteristics to be would be a turf that can stand up to foot traffic (not like Mall of America traffic, but a few kids playing in the yard kind), drought tolerant (sandy soil in full sun with no shade), should be able to spread at a decent rate. Do they make a dog urine resistant strand? lol. As far as color goes, I was thinking a nice green color would go well in the yard. :D

I do not plan on leveling out the bumps by simply dragging the yard, but mainly by bringing in top soil and filling the low spots and raising the whole grade. Won't tilling the yard eventually create uneven settling thus resulting in bumps? The other reason to bring in top soil is to add some good rich soil for the grass to grow in. Right now the bare spots in my yard are 90% sand and gravel and the grass just doesn't like it one bit. Those spots also happen to be some of the lowest. The top soil should kill 2 birds with one stone.

We have lots of sod farms in our area, I will see if I can work out a deal to buy some seed from one of them.

I HATE bluegrass of any type. It spreads by runners and roots. All I used to do is weed whip and edge because the that grass crawls between bricks, and everything else. I live in Michigan and finally used grass seed from Gardens Alive that grows by roots only. It's worth the wait for that fine textured grass. Roots only grass will grow deeper and need less watering to stay green. And the dense root system doesn't allow weed seeds to get a deep grip if any at all. Horizontal growing grass should be obsolete. We gripe about creeping Charlie in lawns when grasses that grow the same are just as bad.

I think most of your existing grass will come up through your new topsoil, only the valleys may suffocate, depending on how well you level the dirt.

K. Bluegrass would be your best long term weed suppressor, but be patient and vigilant to keep it growing well.
You must expect that it will take time for the Bluegrass to establish and that you'll have to stay on top of the weeds in the first couple of years.

Melro, I see you point with Kentucky bluegrass and all the sod-forming types of grass. The problem with fescue and rye grasses is that when they are damaged from heat, too much fertilizer, drought, mowing too low, animals, or whatever, they can thin out. Once the canopy of those grasses is thinned, weeds can come in and might take over. One of those weeds is crabgrass, which spreads by runners over the surface. Whereas if you have Kentucky bluegrass, when it gets damaged it will come in from all directions to fill in the thin spots.