For your private server, just about anything will work for less than 10 players. I recommend 512MB+ RAM, but 1GB is definitely more than enough. CPU doesn't really matter as long as it is faster than 1Ghz for that many players. It would probably even work with a slower CPU than that lol.
And yes, your Quad Core would be more than enough to handle running a public server. I have yet to break 2GB RAM usage (Linux Server) even with 120+ players on. You are correct in thinking that your upload speed would be saturated far before your server PC hardware ever got close to being a limitation factor. With 1Mb down, I have had over 120 players on my server before the upload finally wouldn't let anyone else connect. But, I wouldn't recommend more than 80 to 100 players for 1Mb upload or they will start to see degrading performance and lag will rise quickly.
As for your ISP monitoring traffic, that shouldn't be an issue at all. The worst thing they could possibly do would be to cancel your service. But, I have never heard of ISPs actually taking any action what-so-ever against someone running any type of (legal) server from home.
Ya, the PEQ database is almost certainly what you want to start with.
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