Dexterity is already modifying armor class, ranged and finesse weapon attacks and damage, and the dodgy, divey, and oops-catch-yourself-from-falling type saving throws. I can't imagine why it might be a good idea to pile Initiative onto that as well.
So here's how I've started to handle group initiative in my (OD&D) games: I got myself some playing cards with the
ridiculously oversized indices, the sort for blind old ladies playing bridge. I get one pack; the player characters get another. When a fight breaks out, after any surprise round is resolved, we play a round of war. We each flip a card, and high card wins the initiative. If it's a tie, burn three cards and flip again; repeat until the tie is broken. If one side or the other pulled a joker, they automatically win the initiative and everybody on that side in the fight gets an action point (in the 4e sense) to spend during that combat.
Everybody on the winning side goes first; then everybody on the losing side. And it just alternates from there, back and forth. There's usually no real need to draw for initiative again during a single fight. This way, if the players (whose characters are all going at the same time) want to combine their actions in interesting, tactical, or swashbuckly ways, they can go ahead and do that. In other words, group initiative leads to a lot more instances of barbarians throwing halflings around, and that's just plain a-okay in my book. *thumbsup*