I don't have a ton of particularly specialized advice here, but since you asked for responses:
If you're like most people, in optimal circumstances you can expect to burn at most 4-5lbs of fat in a month by consuming between 450-550 calories fewer every day than you burn. My understanding is that the breakdown of fat for energy is the rate-limiting step there, and the quantity of enzymes in the average body for doing that means you simply can't pull more than 600 or so calories from fat every day under normal circumstances. Eat at a bigger deficit and you're burning muscle or just starving or something. That's my understanding.
I've always heard that it's hard to put on muscle and burn fat at the same time, and I guess I can see that from the perspective that while you're eating at a 500 calorie-a-day deficit you'll have less energy to work out (I go climbing and feel like taking a nap on the crash pads instead!) but if you just motivate yourself to do it, you can still exercise plenty. Plus, you can eat an enormous quantity of protein with a decent amount of fat and carbs in a 1500-calorie-a-day diet, so I'm not sure why you couldn't build lean mass at the same time.
Your goals sound roughly similar to mine. I've burned about 2.5% body fat in a month recently and another maybe 1% last month (I eased up a bit on the diet) and at the same time put on, I dunno, maybe 4lbs of muscle. Not a ton, but I don't want to look ripped, I just want to look good and have functional strength for my sports.
If I were you, I would track my eating and exercise on www.fitday.com, make sure to get enough protein (upwards of 1.7g of protein per kg of body weight per day, although I only get that high on days when I've worked out) and eat at a 500-calorie-a-day deficit, and I'd expect 4-5lbs of fat loss per month and reasonable-but-not-miraculous muscle gain. Just my $0.02.