If you till it in any way, you will find 20 times more rocks than you already know about. I am having this experience right now on a couple acres.
Unless your ground is baked hard - and that doesn't seem possible where you are - I would try to plant the grass with the ground as-is. You might benefit from roughing up the surface a bit with a rake or a chain harrow, but I don't think it needs to be more aggressive. Are there weeds or is the ground bare? Assuming no weeds, I would be thinking:
-scratch up the surface with a rake or harrow (tines down)
-broadcast seed - see recommendations below
-cover up the seed, either by:
---if soil is reasonably soft, run a second pass of chain harrow (tines up) or the rake
---if the soil is really hard, cover with mulch to about 1/4 to 1/2"
For your climate, I think you will have a lot of grass options. I would look at annual ryegrass as a starter. Yes, it's only an annual, but it grows really fast and sets deep roots, which will supposedly break up compacted soil, avoiding the need for any mechanical break-up. I would think about seeding a mix of annual ryegrass, perennial ryegrass, and bluegrass, with the latter two being more or less permanent in your climate. TSC in my area sells a very inexpensive lawn mix (less than $1/lb in 50lb bags) that is 60% annual ryegass, 20% perennial ryegrass and 20% kentucky bluegrass. I have a bag sitting in my garage waiting for use. It is perhaps not the prettiest lawn once established, but will be much easier to establish and keep alive than some other options.
Only caveat - annual ryegrass can contain an endophyte which is potentially harmful to livestock. You didn't mention any grazing plans, but if there are grazing plans with finicky or pricey animals, I would use a pasture-type annual ryegrass that won't contain this endophyte.
If the soil is pretty decent and you having grazing plans, I might skip the annual ryegrass, and use a mix of perennial ryegrass, festulolium, kentucky bluegrass and/or bromegrass.
