What a fun project. Always better to start small, I think. I have been retired for nine years and I love it. I am in Northern Virginia which is also zone 7 and have been planting natives for about 15 years, so that would be what I would do in that spot. We have a few native plant nurseries here and they have helped me a lot. If you have a Native Plant Society (I am pretty sure every state does), they are always happy to help with ideas. It is hard to make suggestions without knowing your general area.

Oh and congratulations and happy retirement!!!

I think the real problem you'll have is dealing with the pebbles. And I really, really hope that there isn't landscaping cloth or plastic under them, though I suspect there is. If so, be prepared for a lot of work. Remove the pebbles as best you can and get the cloth out. You can then begin your project.

Sounds like a lot of work for someone retired to remove the pebbles and it looks nice. I hope you can avoid it. If there IS plastic under there, small, non spreading shrubs or clump forming perennials would be better than something that wants to spread. Being between two sidewalks, I wonder if you have used salt for ice there. If you have, that might be part of the reason that your rose is struggling. It's also likely getting some run-off when it rains. Since you have clay soil, you need to plant something that's tolerant of too much water. How hot are your summers? You didn't say what state you're in.

You can buy ice melt that is safer for plants if you haven't already.

Being an old person myself, I would consider buying some large planting containers to sit there instead of digging everything out. Even if you completely re-do it, it still may be pretty wet since it's between the sidewalks and you kinda need to keep the soil lower than the sidewalk. Using containers would open up some possibilities.

I am in southwestern Illinois so it can get hot in July/August and I do indeed use ice melt on both pathways. The container idea is not something I had considered but sounds interesting.

Thanks for the advice