4. Fight with your ISP who doesn't want you hosting services on a "home" internet connection.

Honestly this might work OK for a personal blog or something but is not a realistic approach to hosting anything with volume or for business purposes. Also you will still probably need to pay for SMTP service as there is almost no chance of anyone accepting mail from your self-hosted SMTP server when the reverse lookup resolves to an e.g. Comcast residential DHCP name.

Of course you aren't going to have access to outstanding bandwidth, but I've used it for business purposes for years. Whether or not you would want to use it for business depends on a number of factors, but I don't think you can flat-out say it isn't realistic for any business.

I've personally never had issues with my ISP blocking it, but I read accounts from time to time (in this thread for instance) where people had issues with ToS enforcement. You'll have to evaluate your own situation, or just give it a shot until they explicitly react.

But you are right about email- it's a pain. Most likely you will have a bad time trying to get something authentic-looking working with a home ISP. Even doing it on a legit VPS is fairly complex.

I have steps 1 and 3 already, now its time to fire up ubuntu server.

Good to hear. The Ubuntu install process will eventually ask which services you want installed so just check off SSH, apache, mysql, etc