Aspects of this topic has been discussed previously but I believe there is confusion on how to determine and apply Initiative Steps. The reason behind the confusion is through out the paragraphs of the Fight Sub-Phase, GW refers to the word "Initiative" when it actually means "Initiative or assigned Initiative Step".
Givens and comments:
1. Initiative is a characteristic and can be altered by modifiers (multipliers, additions/subtractions, and set values). Initiative modifiers apply to the Initiative characteristic and not to Initiative Steps. p.2
2. "Certain situations, abilities, and weapons" can assign a model to a specific Initiative Step. Example: Unwieldy-"A model attacking with this weapon does so at Initiative step 1." p.43
3. Initiative Steps, p.22. "… a model's Initiative determines when he attacks in close combat. Work your way through the Initiative values of the models engaged in the combat … This means that each combat will have ten Initiative Steps …". Using "Initiative" and "Initiative values" by themselves is incomplete in this definition because a model can also be "assigned" to an Initiative Step, regardless of it's "Initiative" or "Initiative values". To be complete, it should state " a model's Initiative or assigned Initiative Step determines when he attacks in close combat … Initiative values or assigned Initiative Step …".
4. Start of Initiative Step Pile In, p.23 "At the start of each Initiative step, any model whose Initiative is equal to the value of the current Initiative step … must make a Pile In move." Since, "Initiative" is incomplete above, "Initiative" in this paragraph is too and should be " … whose Initiative Step …". Initiative Steps now determine the sequence of events, regardless of the model's "Initiative", i.e. the "Initiative" has already been considered and applied thru the setting of the model's Initiative Step.
5. Who Can Fight, p.23 "Models make their attacks when their Initiative Step is reached … Note that certain situations, abilities, and weapons can modify a model's Initiative.". Again this is incomplete as a model's Initiative Step can be assigned thru these means. To be complete, it should state "… a model's Initiative or Initiative Step.".
So, at the beginning of the Fight Sub-phase, Initiative modifiers will be applied to a model. (Notice the Tyranid FAQ where a roll-off will take place when multiple set modifiers are applied). The model will be put into 1 of 10 Initiative Steps based on the model's modified Initiative, or the assigned Initiative Step. The model will Pile In according to the Initiative Step it has been placed into. The model will attack according to the Initiative Step it has been placed into. In a situation where the model's Initiative is modified during the Fight Sub-phase, the Initiative is recalculated using all Initiative modifiers as per p.2. This will be the model's new Initiative. Since Initiative Steps are determined at the beginning of the Fight Sub-phase, prior to Initiative Step Pile In and Who Can Fight, the Initiative Step won't change even though the model's Initiative value may. If you allow the Initiative Step to be reassigned during the Fight Sub-phase you can have a paradox: During the Fight sub-phase a model's Initiative is altered from I4 to I10 during Initiative Step 4. This would put the model into Initiative Step 10, which means all results from Initiative Steps 10 thru Initiative Step 4 are in question.