Thanks for the information bpeezer. 1.2" groups using cheap (if you can call it that anymore) factory ammo out of a sporter rifle is really good, it sounds like you have a very accurate rifle. There is no doubt in my mind that with good reloads taylored to your gun you should gain that quarter inch you desire, and probably more. Since you are only punching paper the Sierra Match Hollow Points are a great place to start, they are very accurate or at least have been for me and very affordable.
For a bench rest the Lead Sled is good choice IMHO. I use a rest when working up a new load to try and reduce my mistakes as much as possible.
And +1 for Scharfschuetzer advice to get a good reloading manual.