Very often, laws specifically cede the authority to create regulations. They tend to be written in the fashion of Georgia Code 32-2-2(a)(12)(A): "The department shall have the authority to formulate, promulgate, and enforce rules and regulations setting minimum safety standards for bridges [...]" The Department references the Georgia Department of transportation, the head of which is not an elected official but one appointed by the elected government. It is that official, not the legislature, who has ultimate control over where bridges can be built, how those bridges will be constructed, and who can use those bridges. This is only an example; the details of what is allowed in society is often delegated to an appointed bureaucrat and down to some technician.
I see no reason that this would be less true in a direct democracy. Since these appointments would be now made by the assembled citizens, they effectively become elected officials - department heads without a governor or assembly - and the system would seem to become a representative democracy with a ruling cabinet. Presumably, these officials would be immediately recallable for incompetence or malice (as in current representative governments), but in practice, a full-time executive would seem better equipped to discover their failings and replace them. And if we were to hire an executive, and decide by popular vote who to hire, I would say we have a governor.
I do not see how a direct democracy of any size does not become by default a representative one. Your section 3 seems to agree with that sentiment. Essentially, you appear to be arguing for a robust system of binding referenda. I would very much like to agree with you in this, though I worry that the referenda offered on ballots in my state are a paragraph long and ask for an opinion on a bill of a dozen or more pages, and they most certainly do not provide any means of suggesting amendment.
I do think there is an opportunity to improve legislative outcomes by making bills of public interest easier to find and read in their entirety, reporting on their intent not just their title, and adding a non-binding referendum to them - even an online poll or comments section (God help us) restricted to verified registered voters in the responsible political district.