First, I'd hold out for a 55g if that's what you really wanted. The lighting will cost you more for a reef on it (as opposed to a 29g), but you'll run out of tank real soon with the smaller and wish you did have the 55g.
Is the chip on the outside corner - in the glass only? It may be worth another look. Hard to say w/out seeing it.
On the rock, 1.5 times 55 is $495 - - but you can consider 25 lbs of LR
and 25 lbs of base rock that will become LR
in no time. You can add pcs of rock here and there with new coral as it'll be fully cured that way. I wouldn't worry about jumping in with the whole 1.5 lbs right away. Read up on Cycling a tank in the articles section at this site (above). That'll help you think better about start-up.
And of course, the requisite - - "Welcome to AA!!!!"
What part of the country you hailin' from?