Carl,
For the most part stirring up the top layer is easy to do, sorting out the rocks is the larger problem. As I mentioned earlier in this thread I use a rock bucket to sift through the loose top layer to collect the larger rocks. Without a good rockpicker this leaves some hand raking to gather the rocks. I haven't had much success with using a boxblade to sort the rocks out. Small rocks will always be there in the soil and shouldn't be a problem for your lawn.
Carl,
That is alot of rock and I doubt the problem will go away either. If you have frost heave pushing new one to the surface each year I suspect this is a losing battle. That said the good thing is that it appears to grow the sapplings and vegetation well in spite of all the rock. So I think I would gather the surface rock and leave the rest of it. Might be better served to add top soil to top dress and smooth where needed.
I worked over a job similar to this in Feb this year where there was so much rock you couldn't get a mower thru it. I pushed and pried as many of the surface rocks out as was reasonable and made a berm with them on the downslope edge of the property. Smoothed the rest up and added a thin layer of topsoil to topdress. Here are some pics from Feb 2011 of the completed seedbed.
We have alot of rock like that and plenty to frigid weather to make frost here in NE Vermont. I find the rocks are constantly being pushed up by the frost on the road or anywhere I plow. But on the lawn where we get snow cover the frost doesn't go so deep and the rocks don't push up. We just got rid of the surface rocks best we could and covered the area over with sump sand (poor man's loam) then planted the grass like jenkinsph suggested. You can see the tops of rocks in places and for a couple I have to lift the mower deck a little as I go over but it stays the same every year. So if you get snow where you are you might be OK.