I like your proposed system. A 5 gallon cooler with a braid is an excellent way to start. Those round beverage coolers are tall enough that you can easily do a PM in it, plus you can do all grain batches, too (at least up to SG of 1.060 = about 12 lbs of grain). That's the way I wish I had gone (instead I have a 3 gal for PM, then bought two 10 gal for AG).
If you do pursue AG brewing, then just add a 10 gal cooler (or 48 qt rect. cooler) to mash bigger brews in (i.e., SG > 1.060). Then you use one cooler for the mash (pick the best size depending on the SG) and the other for the hot liquor tank. This would then solve you problem of needing two big pots.
If you can swing it, try to get at least an 8 - 10 gallon pot soon. For extract brews with a PM, you can use the 4 gal pot and top up with water in the fermener, but this doesn't work well for all beers (e.g., can't do big hoppy IPA's because there isn't enough water in the boil to get good hop utilization).
Regarding batch sparging, why don't you reserve the kettle for heating the sparge water and use a plastic bucket (you must have one, right?) for collecting your first runnings. The wort doesn't stay in there long, because as soon as you have lautered your mash into the bucket, then you immediately dump the water from the pot into the mash tun. You can then transfer the wort into the now empty pot to boil it up.
Finally, here is a good link on converting AG recipes to PM recipes:
Or, use a piece of software to do it, like ProMash or Beersmith or BeerTools.
Hope that helps.