I am about to do something similar and had the same question and surprisingly there wasn't much help from this site.
For Terre Haute (I used to live just south of there) you will want cool season grasses such as tall fescue, Kentucky bluegrass, or perennial ryegrass or a mix of them. A commonly used mix is tall fescue and kbg. To find out what cultivars perform the best in Indiana, take a look at the NTEP
website. They grow and evaluate different species of turfgrasses all over the country.
Your seed supplier or local univ. extension should be able to recommend the best mixes or blends for your area. For my area TN/KY border, I know the best tall fescues were LS1200, Bullseye, and Faith. They were some of the best performers overall in the nation and probably done well in IN also. I'm not really up on the KBG cultivars but I hear Midnight mentioned alot as one of the best performers.
As far as killing off the existing lawn and re-seeding, here is some info I dug up from another site...
The best time to sow cool season grass seed is in September. Planting grass in the spring doesn't allow enough time for the tender roots to grow deep enough to survive the summer heat and drought. Consider putting up with what you currently have and make plans for the fall.
In planning for fall, I'd suggest a spring application of lime right now (20#/1000). Buy your grass seed mid summer. Check out John Deere Landscape for premium fescue. They always sell the leading seed varieties.
I have the best results on a "junky" lawn when I kill everything off first. By September your weeds will be mature, so up the concentration of Roundup a bit. Make sure you don't spray Roundup during or immediately after a long dry spell because the plants won't take their "medicine" very well. Wait until you've had a bit of rain and things are doing well before you spray. Wait at least 7 days to see if you got everything, and if not, re-apply the Roundup.
About 3-4 days after the last application of Roundup is when you can begin renovation. I would apply your grass seed at the rate of 8#-10# per 1,000 sq. ft. That is a high rate, but you are going to a lot of work so I feel it's a good hedge. Then apply your starter fertilizer (18-24-12) as per package recommendations along with lime at 20# per 1,000 sq. ft.
Lastly I would aerate. On jobs like yours I would use my tow-behind aerator because it is a little more aggressive than the walk-behind ones. Translation... I'd tear up the place with the aerator. If it looks bad after you are finished, you've done it right.
If you have large areas of open dirt, you could cover it with straw. Just remember that straw has lots of weed seeds and they will happily come up along with your premium grass seed. If you could cover the bare spots with another choice, say a thin (1/4" - 1/2") layer of mushroom compost, you'd be better off.
Now all you need is rain and time. When the grass is tall enough (4"+) to mow, then mow it at 3.5" high. Thirty days from seeding (01-Oct) I'd apply another round of high nitrogen fertilizer at the rate of no less than 1# of N (nitrogen) per 1,000 sq. ft. If it is still warm by the middle of November I'd give it a second app. of high nitrogen fertilizer (32-3-4). It should stay nice and green all winter. In the spring you'll have the greenest lawn on the block. Just be sure to plan on a 5-step fertilizer program and you should be fine.