I think: "oH MY GOD, WHY ARE THE WALLS MOVING?"
When it's your move, what is your thought process?

I would imagine that if he read your post he would probably endorse giving tactics their due as the more important element to be considering. But in any event, regardless of what he would say, you already seem to know that being alert to threats and tactics of all stripes is important.
From reading the introduction of Silman's Reassess Your Chess and Silman's description of "Joe Everyman" (No Everyman that I've ever met before) I got the impression that his strategic words of wisdom were meant more for the club player who had already grasped tactics but was ignorant of strategy. For Mr. Everyman, it went without saying that an alertness to threats and combinations was neccesary.
I see. Maybe he includes steps 1 and 2 in his "figure out the imbalances" stage. In fact, I guess it would be hard not to do steps 1 and 2 while figuring out the imbalances, because (as one example) how else would you tell who has the initiative?
Thanks,
Tom

Such a loaded question. Depends upon my opponent, the position, my state of mind, whether I feel like playing simply or complicated etc.
In short it is impossible for me to tell a definitive answer without looking at a position.
But, some things which I am always thinking about are
1.where do my pieces (of course taking into account what pawn structure is beneficial to where my peices want to be) want to be
2.can my pieces be maintained where they want to be
3.where does my opponent want to put his pieces
4.do I care if he puts his pieces there
4a.I do care-how do I prevent them from getting there without making a positional concession if possible
4b.i don't care and I allow them to proceed with their ill conceived(or in my mind) plan
Occasionally, my opponent makes a move which sets off tactical or positional alert. Stop look for said tactic or how to take advantage positionally.
If I find a good tactic or strong positional squeeze then I play it if I don't I go back to my original plan.
When it's my move, I do the following:
(Actually, it's a bit more complex than that, because sometimes my opponent has a tactical threat (1) and yet I still go to steps 2 and 3.)
What do you guys do? Something similar to the above?
The reason I ask is that I get the impression from Silman's How To Reassess Your Chess that Silman suggests doing step 3 first, which seems backward to me. Is that really what Silman is suggesting, or have I misunderstood (hopefully the latter!)?