How Facebook determines the list of 10 Friends to display on your profile?

There are people consistently on my list whom I never interact with.

I've noticed that the friend suggestions seem to be related to whose profile I had been viewing during the current Facebook session.

Yeah, I think it's a mix of those two things - my list is composed of: a) people I interacted a lot recently b) people I interacted a lot in the past (and then almost not at all for a long time) c) people I haven't really interacted at all

"c" must come from H2, "a" from H4 and that leaves "b" as either flaw in H4 or also a H2 - the latter would be a good news for me because people from that category are actually girls I gave up on a long time ago thinking they are not interested in me ;)

Well, some people show up on mine with whom I've never interacted save making/accepting the initial friend request: this would seem to indicate that recent interactions weren't necessarily part of it.

I don't think that it does. The algorithm makes it possible for users to see who they publicly interact with the most, but this information could be gleaned by viewing that person's wall postings or photo comments. Therefore, the algorithm is just showing you people that visit your profile and interact, which you could figure out pretty easily anyways, not people who visit without leaving a mark.