I am wanting to grow Italian Stone pines on a terraced/swale system of a south-facing hill. Do I need excavation equipment to make this? If so, what are the alternatives to getting large machinery? Is there possibly machinery that I could walk behind that is used for digging? Also, could I grow the pines in hardiness zone 4 or 5? Are there hardy varieties of the Italian Stone pine? When the pines are tall, is harvest done from the tops or from the dropped cones? What are the ways to harvest large amounts of the nuts from cones and then the seed husks?

I recommend going and spending an hour or so trawling youtube for methods to harvest pine nuts. I found plenty when I looked a few years ago. That will give you a better idea of what you need to bear in mind. When you think about laying out your plantation you want to consider not just how to physically fit the trees in, but what access you need during harvesting etc...

I would look into Korean nut pines, Hardy down to zone 2.

The Italian Stone Pine is only hardy to zone 8, that means it would not do well in zone 7 and it would die in zone 4/5 with out being in a conservatory setting (tall green house).

Better choices for pine nuts in your zone would be Korean or Sugar pines.
If you could grow 200 foot tall trees the Ponderosa Pine gives off huge cones and nuts.

Pine nuts are harvested in the cone, while still on the tree, cherry picker trucks are normally used to gather the cones just as they begin to open for seed drop.
If you have a squirrel population (any species including chipmunks) will actively harvest your crop, this makes it imperative that you harvest cones on the tree or they will beat you to your nuts.
To harvest the nuts once you have the cones you peel off the fingers starting at the bottom of the cone and work your way up, small pry bars save your fingers from damage.
The resulting refuse (cone fingers and core) are good composting materials or can be used as mulching material.

Redhawk

So that's how serious people actually pick them!  I was wondering.  I have four big old Italian stone pines in the front yard, and have hardly ever tasted one!  The crowns of the trees are way up there....they are every bit of fifty feet tall and the only way I see the cones is when they hit the ground, and by then they are usually fully open and the squirrels and woodpeckers have long since gotten just about every nut!  The sugar pine and gray pine out here are also nut bearing but they are even taller!