Your thoughts are on track, Renesis. Do you have a dormancy period in San Francisco? Do trees drop their leaves? It has been such a long time since I visited San Fran.
Assuming there is a 'dormancy' period I would wait until fall to do major pruning. Take 6" off the top now...work up to at least a third taken off before winter. Take no more than 1/3 off that plant.
I am thinking it needs up potting into a number 10 or 10 gallon pot. I am just guessing (along with hubby) this is a 7 gallon pot, yes? Anyway, at least 2 to 4 inches wider in diameter. No more. Potting soil, only. Raise the bottom off the surface it sits upon with rocks, pieces of tile. This guy loves drainage and is very drought tolerant.
I'd up the fertilizer a bit until dormancy then half of what you are doing for the winter. You don't have to worry about freezing temperatures, do you? Roots are the most fragile part of a plant, next leaves, next branches and trunks. Roots in pots are subject to temperatures most roots in the soil of a garden don't have to deal with. Too hot or too cold will affect roots of a potted plant.
Larger pot with fresh potting soil should make a huge difference as well as a light heading, pruning now. Plants ideally should be twice as wide as tall. Hedges and ornamental shrubs are pruned to 1:2 or at least 1:1 1/2. 1 is height and 2 is width. Do you have hedging shears? 2 handles, like big scissors?
I'd wack off a good 6" now, off the top flat. Level, then point the tips at the center of the plant (this is tough to describe). Imagine a line straight up from the center of the plant. Point the tips at a spot 6" above the flattened top on that central imaginary line. Keep that angle by pointing at that spot.
You are chopping from below the plant pointing the shears at that spot or whatever spot as long as you keep that same angle all the way round your plant. The handles are lower than the blades. Keep the blades tangent to the plant. The goal is to get your rosemary to be 1 tall and 1.5 width. This is a ratio. Rosemary tends to be more tallish than wide naturally so 1: 1.5 is reasonable.
After transplanting and firming that soil fairly well around the roots of your rosemary, soak that plant very very well. Now feel its heft. Rosemary appreciates about half that heft. Newly transplanted it should be soaked. Normally it should not feel that heavy. Keep testing the heft every day. It should take awhile for this newly transplanted plant and soil to dry.
I simply push a pot with my foot. If it easily moves or tips that plant needs water. If it barely budges I would wait to water. You'll see or rather 'feel'?
Fertilizer. I like those numbers. Single digits makes sense as long as you know what to look for from the plant. Higher numbers get dangerous. I do like Osmocote 14-14-14 extended release. This 'applies' fertilizer over a period of time. 4 to 6 months for plants in pots.
I am seeing in your plant the thinning that comes from too little nitrogen, the yellowing of leaves at the bottom and the green leaves at the top. Nitrogen is a mobile chemical (some call it a nutrient, not me). That means when the plant has limited resources of nitrogen the plant will mobilize nitrogen from the lower leaves that don't get much sun anyway to the most productive leaves at the top.
When you transplant into fresh boring plain potting soil, add more of an even numbered formula. Dr. Earth's All Purpose 5-5-5 impressed the heck out of me this year. Great fillers with bacteria and fungi that are great for potted plants out of doors. Osmocote works well just do half of the directions. Make sure the potting soil you purchase is the cheapest. The expensive soil will have fertilizers and/or moisture holding gimmicks (gels, sponges) added that you do NOT want. Leave 1" between the surface of firmed soil and the rim. No less and no more. Helps with monitoring the watering.
I most certainly can explain this better if necessary. Working on an application to be able to 'sketch'...then send with answers. Not what I was hoping for or I need practice?
Renesis I am amazed, you totally understood. What a beautiful diagram!! Wow. You are also correct that propping up your pot helps drainage big time!
Diagram added below: