I think that the 'Group the items and discuss' is meant to be the generative part (your # 3) - so thank you for adding that distinction. We aren't too formal with the process, and we sort of do a little of #3 & #4 in there - though most of the deciding on actions is done by the role taking the action/project.
Regarding agile, I agree with you - it is weird to 'use agile' - it doesn't make sense conceptually. I meant 'use agile' as shorthand for 'use agile software development methodologies' - I had thought the rest was implied, so I apologize for the confusion. I really only think of 'agile' as describing something else (agile principles, agile methods, etc.), so I didn't expect that interpretation, but I see it now that you say it!
I do disagree that you can 'be agile' in the sense you described it - I would actually say something more like 'you can embody agile principles'. To me, 'agile' describes something based on context and is sort of meaningless by itself, and difficult to quantify and embody. Unless you mean 'agile' in the traditional sense, as in 'agile like a cheetah', then maybe you can be agile, but definitely not me!