Should I consider dropping the Optical drive from my build and putting the money in an i5-4670k (instead of a i5-4570) even though I don't have the budget to get a pricier mobo/psu to overclock? Or should I just go with the i5-4670 for $5 cheaper?
if you don't have the budget for a decent z87 board to go with the 4670k, there isn't really any point getting it
there's no benefit if you don't have an overclocking mobo and a cpu cooler as well. Go with the 4670, get rid of the optrical drive and try and get a better GPU.
That's a very opinionated question, and ultimately you'll have to make the decision yourself. Keep this in mind:
Total for OC = CPU+Aftermarket Cooler+(Z87 motherboard-H87(or B85)motherboard)
Total for no OC = CPU+Motherboard