If a player uses this ability during combat, and he increases his agility bonus...does he increase his rankings on the initivative.

Yes, that's correct. Effects that alter your effective Agility Bonus, aside from Unnatural Agility, will increase your initiative mid-combat.

Errant said:

Why Unnatural Agility doesn't work? It says it doesn't affect Movement, but I don't remember anything about Iniciative.

Whoops. That's exactly what I was thinking of, got them mixed up somehow.