Sux about the seats. As for the screen I was going to vote for 1.78:1 because there are plenty of movies filmed in that aspect. But I started thinking about your issue of the bottom of the screen getting cut off and figured using up the entire width with 2.35:1 could be better. Then I assume 1.78:1 content would just get black bars on the sides.

If you can't do a wall to wall 1.78:1 because of height then I'd say do a wall to wall 2.35:1. It basically comes down to which format you want to appear to be larger. With more movies being 2.35:1 that might be the way to go. Of course I don't know much about projectors so I could be completely wrong about their ability to do this.

As for the stage, if you're worried about it taking too much height away, could you just build a very short one? Just a few inches to give the front a different look from rest of the room? Just a thought, would be less sand that way as well.