Help! I need more details on doing a clean install of 10.7.3

I have a late 2008 mac book pro, intel 2.4ghz processor dual core, 4gb of RAM. It came with Leopard, I upgraded to Snow Leopard and just recently to Lion. Since upgrading to Lion, my system runs very slow, takes for ever to boot and hangs often requiring me to force shutdown (hold power button down). I did a time machine back up before and after the upgrade and have both on an extermal drive. I want to reformat and start over and I've found a few articles on doing this using the recovery HD. I have a few questions I'm hoping somone can answer:

1 - If I format and reinstall 10.7.3 using disk utility in recovery mode, I'm just going to have LION running on my system. I'll of course need to get all my data reloaded (hopefully via my time machine backup) and I'm pretty sure I'll be missing things like iLife apps (garage band, iphone, imovie etc..). So, if using my time machine backup will it restore all my apps and data? Can I pick and choose or is it all or nothing? Do I need to download new versions of iLife apps? I'd appreciate any and all help and info here.

2 - I'm contemplating replacing the hard drive as part of this process as my gut tells me I will go through some painful process to rebuild my system and the hard drive will fail. I downloaded 10.7.3 again and followed a procedure where I opened the package contents and burned the install.dmg file to a DVD. Can anyone provide a link to an article or some tips on loading LION from DVD to a new drive. Wouldn't I need to burn an ISO so I can boot from DVD and then start disk utility? Any help here is also greatly appreciated.

Thanks in advance!

Rick