JimG: I'm just east of you outside LaCrosseWI. I've been reclaiming 6-8acres of overgrown field over several years. It was at the stage of overgrown by boxelder, black locust, other scrub brush and trees, plus ravines from washout and erosion. Piece by piece I've cut down, filled in and planted grass. Used a lot of NK's "Northland" seed (available at FleetFarm for $25/20lb, not a bad price), a blend of blue, perennial rye, some fescues.
Unfortunately my timing is usually rotten, and I rarely got enough rain to support good germination of the blues.
It's helpful to apply straw over the seeded area to help reduce drying and provide protection.
The clumps your grass grow in are due to the type of grass -- can't remember what type does this. But the better types propagate by rhizomes -- root extensions that form new growth.
Blue fills in this way and thus fights off crabgrass etc by allowing little surface area for the nuisance seeds.
Some perennial ryegrass is almost as good as blue and looks similar.
Also try
www.grassseed.com for more info (lots of sites on Google/search for "grass seed")
Regards prepping the ground, I'd try the landscape rake, set at a 30 degree or more angle. That will scrape the lumps and mounds flat, and may scratch up the ground enough to give the seed a chance -- you definitely need to break the ground surface. As another commenter said, a power cultivator would be ideal to dig down 3-5 inches, but you have to loosen the surface by 1/2" or more however you do it. Otherwise the seed won't take, and you've wasted 2 months waiting to mow the stuff.
JimP