Rebuilding my website

My site, http://www.manasikarogyam.com, uses Joomla 2.5, and is mainly based on EasyBlog. It was hacked about an year back. Though I had recovered it from a backup, many pages return an internal server error even now. I had tried many solutions, including replacing all Joomla files and all extensions and templates, but the problem still persists. What I plan to do now is

1. Create a new directory in the root folder
2. Create a new database
3. Install Joomla 3.2 in that new directory using the new database
4. Install EasyBlog in this one.
5. Manually copy the html of every article and paste it to the new installation
6. Delete the files of original Joomla installation, extensions, templates, etc. from the root directory
7. Move all files of the new installation to the root directory

Now, my questions are -
1. Is this strategy likely to work? Will there be any problems, like issues with paths to various files, when I move them from the subdirectory to the root directory? If yes, will I be able to solve it by any bulk edits in the database?

2. Is there any easier alternative strategy than the one I have detailed above?

Thanks in advance.