Lanefan
Victoria Rules
This is one of those oh-so-very-rare instances where I find myself agreeing with @pemerton.And? Yes, individuals act on their initiative. I know how the process works, I just don't have an issue with it and there is no "going back in time". It's a simplified abstraction like everything else in the game. Don't like it? Play a different game.
The way WotC-era initiative works is very much a stop-motion kind of thing; to the point where characters' movements in combat are much like mini-teleports rather than second-by-second motion.
Also, by strict RAW (in 3.xe anyway, not sure if it's been fixed since) two or more characters can't move as a unit in combat, e.g. they can't hold hands and run through a wall of fog or a darkness effect together, even if one delays its initiative until the other's initiative comes up. Why? Because by RAW, actions - even move actions - can't happen simultaneously. And that's just stupid.
And yes, initiative is a simplified abstraction, but it's one that flat-out doesn't do the job nearly as well as it could or should.