Paint strainer bag works great. Cheap. And you can try it out a few times and IF you want to continue BIAB, you coudl upgrade to a Wilserbrewing bag later. I hear they are really nice.
Don't fret about kettle size, gravity, etc. That stuff is all doable in some way or another. You have the advantage that you are planning on doing smaller batches. A turkey fryer kettle will work great for you. A 10 gallon kettle is actually better though, you just might not need it until later.
if you want to do a higher gravity beer you can mash thick and use lots of grain, then sparge in a separate kettle (or bucket filled with hot water or cooler or whatever) and combine to get a high OG wort, then dilute at chill time with cold sanitized water.
I do recommend a nice IC, though. Sure beats a sink full of ice.