from experience you'll be lucky to have 20 students on at the same time using Moodle 2 on shared hosting.
I'm sure you've read that there are many definitions of 'concurrent users' but I read yours as '100 to 150 students' taking a quiz simultaneously - please correct me if I'm wrong.
The following is based on observations from my server for about half what you propose - quiz taken by 2 classes (~50) & other users navigating about Moodle (Ubuntu 10.04, Dell precision 390, 12GB RAM, only 1 HDD). I don't have anywhere near as many users as you do (700)
- RAM used: 3 to 4 GB
- CPU: 75%
My main bottleneck is the drive, even though I have cached everything I can imagine. New setup coming soon
There isn't a limit as to how many users you can put on a Moodle site but you will need some serious horsepower if you want to run a large Moodle installation. For example, you mention 5,000 users - how are you going to manage authentication? This could have an impact (e.g. LDAP).
To cut a long story short, yes you will need a dedicated solution for your needs. $500 monthly suggested by the Moodle partners sounds about right to me (considering all of the great support most offer). It all depends if you already have access to proper bandwidth or not (e.g. can you have a server in-house). If you do, then you can get your server setup for much cheaper.