Just fyi re raising of the yard level and putting in a slope: I believe many of our Lower Mainland communities have bylaws that prevent the alteration of any existing swale. You might want to check with your municipal hall's engineering dept. to see if your regrading plans are ok, to ensure neighbours' yards are not impacted by water being redirected to them. We faced a similar problem and put in a similar ditch along the back of our yard. It diverted a bit of the water off the lawn, but with the shade and constant moisture, we still face a soggy yard every spring, fall and winter. My mainly fescue grass in that area is usually 1/2 gone every spring. I've patiently reseeded each year, but that's not for everyone (especially someone with dogs). I have found the area that I seeded with Perennial Rye actually faired a bit better this winter than the fescue, even though the fescue is usually what is recommended for shady areas. Can you reduce the shade at all?

This is just my thoughts running rampant, I'm no expert, but since your main issue at the moment seems to be the soil's lack of ability to absorb water, I'm thinking water as deeply as you can just prior to aeration to soften the ground to make it easier for the plugs on the aerator to penetrate the hard soil. Then after aeration, water again to let the holes fill with water and soak into the soil before you top dress with sand. The sand should fill in the holes left by the aerator and eventually work into the soil and help change its structure to something that'll absorb water better. From everything I've read about top dressing, its best to add no more than 1/4 to 1/3 of an inch at a time, more than that could smother the roots.

That depends on the sand. I have seen areas where 4" of topsoil was added on top of washed sand and seeded to lawn. Turns brown every year with daily watering. How long will a 1/4" of water keep the sand wet now? I would till in water retaining ammendments, just to be safe. Easy to lose sod.

I can't help you up there, but it made me laugh thinking of your beautiful dogs racing in circles. How do you keep stuff from growing into sand or gravel? Christine