1) Reasonable strategy? In general, the plan you outline will absolutely help. You might read thru the Linking forum for more thoughts.
2) form letter? You can find a few examples on the board by searching here. Something like this works for me:
Hi, my name is (name) and I am writing to commend you on the excellent website, "Name of Site(www.example.com)" (Add sentence that makes a specific comment about site so they know I actually visited it). I'd like to invite you to add a link to your links page of another website that (is somehow of interest to them or their visitors), www.mysite.com .
"My New Site" is (wonderful because of a couple thing I list here). (Maybe 1 more sentence about the site).
I hope you'll take a few minutes to visit "My Site". I have included html code below for you to easily copy and paste the link into your site.
3) lowest PR? If you're doing this primarily for PR improvement, 4 or better. As you're already a 5, 5 or better. I'd suggest that PR's not the only reason to solicit links. Traffic & branding come to mind.
4) response? Depends :) on your content, the more quanity/quality the better. & on the level of commercialization, the more the lower the response, all things being equal. Somewhere between 1% & 30% but 5-10% is probably the most common.