indonesian response to deteriorating situation, page-163

I don't KNOW how the "intelligence" collection system works however, I would agree that it probably happens along the steps you outlined.

As long as nothing worthwhile reporting is happening - like listening to what the President is talking to his wife about - then step D. is unlikely to happen IMO and the procedures just keep going without being reviewed.
The collection agencies would most likely have a tendency to colour their findings in order to maintain their budgets and build their "empire".

Happens on all sides.

And I don't believe that what surfaced now has not been going on for extended time before or is not going on now.

The apology should be made for having been found out so we all can go on.

Abbot playing the strong man just forces the other side to step things up.
SBY is in a weaker position in local politics than Abbot IMO and because of that must react stronger.