OK, where do I start?
Proposing is a serious business and unless you suddenly have a more important budget in the next 2 years, you wouldn't be changing the ring. You do not want to be light on the matter and end up 1) being cheated on your diamond 2) upset your girl because you hadn't put in more money and effort in your enterprise.
As a general rule, the 1st diamond should be worth 2 months' of your salary.
Next, I have bought diamonds in shops, through the guy supplying boutiques like the ones at Hotel Crillon in Paris, on the Net, second hand jewellers, private sales, at Diamond Industries in Singapore etc etc.
I've been cheated very often on the Net - because you cannot gauge your diamond (not even thru photos, so-called diamond apparaisals etc) and it is difficult to know if your stone is natural or has been treated until you get it and have it appraised independently yourself. Then of course you may not wish to buy war diamonds from Africa and end up supporting some evil cause.
Buying diamonds is also a complicated art and science. Art because it is personal and subjective and science because it does come along with well-developed measurements and standards e.g. the 4Cs, refractive index, proportions, combination of everything.
Buying directly from someone in the business is the best bet but you need to know one, of course. If you know of auction houses or 2nd hand jewellers where you can actually visit and touch the stones, they could be great. They also usually have inhouse experts and eventually work with jewellers who may be able to set your stone for you. Of course for a proposal I wouldn't advise a 2nd hand ring, but it'll be ok with loose stones.
Unless they've since revamped, diamonds sold at Diamond Industries in Singapore are commercial grade diamonds. Great for the nice diamond pendant, earrings and odd pieces of pleasure jewellery, but I would be a little more careful with a proposal ring. Girls talk about their rings with other girls, they compare. For such a significant ring, they'll want at least a H colour (size actually may not be so important for this 1st ring but best be above 0,5ct), perfect cut (e.g. 58 facets), round or princess (but you know your girl better she may prefer Emerald or Pear), and your setting better show the stone off to advantage (mine has gold ring white gold claws but it's classic and some girls want it in antique style, filigree or with side stones, even coloured gems...). Clarity too would be important for a ring because that's what people look at 1st, so nothing worse than VS2 or SI1. And if your girl is unusual, she may actually prefer a coloured diamond.
One reason why you are right to not want to set your stone is that unless you know it well, it could be replaced during the setting if your setter is not honest. Otherwise classic rings are easy to set.
I am lucky to be invited to private internet sales in France like once a year. I've bought from Mauboussin, Golay etc this way, usually at less than half price what you would pay in their boutiques. In Singapore I know that they have jewellery sales (not the House of Hung eternal 80% off kind) at hotels from time to time, keep your eye on the Straits Times for the adverts.
You may want to visit a few small boutiques and ask them if they have offers on their loose stones. You never know, they may want to clear stock. And you can at least see what you're buying in person.
Also, there are a few more reputable internet sellers like Blue Nile and you'll find other recommendations in Pricescope. With the USD going down, it could be interesting buying from boutiques selling in USD especially when many have a refund policy. Get the whole ring then as they may even allow you to customise your ring for no extra charge.
Je pense donc je suis. Le reste du temps, je ne suis qu'une fleur.