Yes the only thing that I would do to make a false bottom would be to get a round piece of stainless steel and drill 1/8 or smaller holes all over it. You could make a neat pattern too. In the long run it might be worth it to make a 10 gallon mash tun just because you will make a kick ass brew and you would want to make a bigger batch of it. I'm just thinking in the long run.
But if you make this one super nice and feel In a year you want to make a bigger I'm sure you could sell it.
Good luck.
The best part about this setup is that the fittings should be interchangeable with the 5 or 10 gallon Rubbermaids. Whenever I feel like upgrading, all I have to do is pull it apart and it should all fit right into a new cooler. Although, it's only about a $15 system, so I might just keep the small tun and have a separate large tun... but then again, I could use the second valve setup to put together a hot liquor tank. Oh, the possibilities!
Rawkstar320: Check out Deathbrewer's Partial Mash BiaB tutorial sticky. That's where I learned the basics of it. I've found that if I order my grains crushed and then, when I get them, throw them into a blender and give them just a little bit of a whizz I will end up with slightly higher efficiency (it's safe because in the bag you don't have to worry about stuck sparges). I figure I usually end up with 65-70% if I mash for an hour and let the bag rest in my separate sparge water for about 10 minutes, but you will find all of this discussed in the aforementioned thread. Good luck!