Whether the Ampeg PF-350 is overkill or not depends on the cab you're using and the gigs you'd be playing -- it's more than you'd need for a coffee shop through most any cab -- certainly more than you'd need for at-home, solo practice -- but, in general, I'd say no. Most solid-state (i.e. non tube-power) heads can sound pretty consistent through the bulk of their volume range and just about all of them have a volume knob.
If you want to gig, as long as the head and cab(s) are reasonably matched, it's better to have a little more than you need than a little less.
This approach -- start with a single, 8 Ohm cab and potentially add a second later is a good one, I think, as long as the 8 Ohm cab has the potential to do at least some smaller and medium-ish gigs (whatever that means to the OP) on its own.
I would add that the head doesn't have to be class D -- there are a lot of nice and still fairly compact class AB amps available on the used market for relatively cheap that will get the job done nicely (and some new, though none I can think of at the moment that would leave much money for a decent cab from the OP's budget).
There are some medium-sized, single cab solutions (compact 2x12s, capable 2x10s, etc.) which could make sense (and even make sense in 4 Ohms) depending on the OP's idea of gigging and the amp he'll be using, but your approach offers more flexibility, particularly if one's future gigging needs are uncertain.
A good question.
OP, there are dozens of routes you could take which could all work well.
A good, solid, 8 Ohm 1x12 (doesn't have to be fancy, but don't cheap out on the cab -- it is often more of a limiting factor than the amp) is a good place to start. You could also go with a 2x10, a 1x15, or even a capable 1x10, depending on how compact you want to be with your rig and the kinds of places you see yourself playing.
If you like the Ampeg sound, I'd look at the SVT 112 AV, the SVT 210 AV, and maybe the SVT 212 AV or one of their Portaflex cabs.
I've played through a 210 AV live a few times -- sounds great (though I've only played it with 4-string, not sure how I'd like it on a low B), would match well with the PF-350, doesn't cost a ton, and slots into most mixes in a very friendly way. One is plenty for home practice and coffee shops and a Blues band with some dynamic restraint in a pub. It will not, IMO, keep up with a hard hitting drummer. Two make a nice, vertical 410 that will let you monitor yourself easily and should handle most bar-type gigs (your drummer could go ahead and get rowdy in that pub), but still would be what I'd consider a medium-duty setup, as far as 4x10s go. (I'd want more in a couple of the louder venues I've played and for some outdoor things.)
You can get two of those cabs and a PF-350 new for $1050 -- 50 bucks over your budget -- from Sweetwater. You could also get the one cab ($700 with the PF-350 or the 200 Watt Micro VR), to start.
(Re. the 350 vs. the Micro VR, you might find this of interest: Ampeg Micro-VR vs PF-350)
I've not played the 112 AV -- it's rated for 300 Watts, as opposed to the 210 AV's 200 Watts, and, per what I've read on TB, should have some more oomph in the low end. It's also got an adjustable tweeter, so you should be able to get some more crisp and extended top-end, if that's your thing. The cab is low and wide, but you could set it on its end to make it narrower and taller, which you might find beneficial in some situations. It's $550, as opposed to $350 for the 210 AV. (The 210 AV also matches nicely with the Micro VR head.)
If I were to pick up one of those, I'd probably go with the PF-500 ($450) rather than the 350 ($350) for a little more dynamic headroom with a possible, eventual stack (the two cabs would be rated for 600 Watts, combined, at 4 Ohms, which should match nicely with the head's 500 W @ 4 Ohms). One of those cabs and a PF-500 would be a grand, even, new.
There are fancier and less fancy (but still capable) options you could look at -- if you're willing to consider other brands (tone and music preferences will help people guide you), mix brands between amp and cab, and/or look at the used market, options increase dramatically.
Most will be a pretty significant step up from your practice combo.