It's usually better to start with a small section so you don't get worn our or discouraged and because you learn things and discover things in the first area that will be useful in the areas you work on later. Maybe start close to the house and keep extending out over time. Cut the whole area down low with a line trimer and then remove the rocks and do any rough levelling, grading or shaping of the ground you desire before doing anything else. The next step could be one of many methods including something like what you suggested (except running a tiller through the rocks would not be very kind to the tiller). You might find some landscaping uses for the rocks (borders, erosion control, etc.) so don't kill yourself hauling them all off site just yet -- just put them out of the way somewhere. If you do till, don't rely on it as a weed killing method since it can often have the opposite effect since many weeds will increase after tilling and tilling brings up weed seeds. You might want to till for purposes of loosening your soil but not really for killing weeds. Don't till when the soil is saturated it's too hard to do and is bad for soil structure. Everything mentioned so far would be done before the real weed killing beings. Most methods will take much longer than a few weeks. If you use plastic, you would have to use black plastic to have a chance of it working in just a few weeks or even a month or two. To kill with clear plastic would take a long time and maintaining a cetain amount of moisture, etc. which is probably more than you want to do. You could also smother the area with big rolls of black landscape fabric which you would have to remove before planting grass. You can also heavily cover with newspaper and cardboard to smother the area. The chemical route would be to use Roundup on a dry, non-windy day and then repeat again every week or two during dry, non-windy days when survivors and new weeds pop up until there are very few weeds. Smothering should probably be done for a season or more and then plant your grass (see lawn care forum). I have had pretty good success in battling weeds by planting rye grain (the kind you eat not the rye grass that is grown as suburban turf) in the fall and letting it grow until spring then cutting it down just before it makes seed (and making sure it is dead before any new planting). The rye grain helps to outcompete the weeds over the winter and engages in a bit of its own chemical warfare. Note, however, that if you don't want a big tall agricultural looking field of rye during the winter then this is probably not the way to go. You can cut the rye once in the winter when it is tall if you can't stand it being so tall and it will probably still survive until you kill it in spring. A final preachy plea: please visit the natives forum to see and request various ideas about what to do with your yard. Even when just planting grass there are many options.

if I use the breathable landscape fabric sold at Costco, when I am ready to plant, can I just put 4" of top soil on and good to go without removing the fabric?

I think it's better to remove the fabric where you are going to plant grass or sow any seed. Some grass roots will make it through the fabric but I think they won't like it. Many types of good healthy grass can and should root deeper than 4" so they might not appreciate running into the fabric. You could double check me on that point over at the lawncare forum and you could generate a debate about the fabric in general over at the soil forum. Also, some new weeds would inevitably settle in the top soil and would do a good job in many cases of rooting through the fabric and then be harder to pull. In contrast, if nothing did penetrate the fabric I wonder if you would have a soil level on top that was prone to sliding off. Spreading all of that top soil would be a pain as well. You could leave the fabric in areas where you want to plant trees and shrubs and just cut out holes for those plants. I happen to dislike the landscaping fabric but I know it has its uses.