Rome's Reconciliation of Paul and James

I think I’m beginning to get a handle on the Catholic approach to reconciling Paul and James. Unless I’ve totally misunderstood their position, I think it goes something like this:

There are two kinds of faith, and two kinds of works. (1) Dead Faith is a bare intellectual assent akin to that of devils; (2) Living Faith is the genuine kind of faith that produces heartfelt obed-ience; (3) Dead Works are works done without living faith; and (4) Living Works (not the best way of putting it, but I’m trying to keep this simple and consistent) are those acts of obedience that spring from living faith.

How does this apply to the apparent contradiction between Paul and James, with the former saying that Abraham was justified apart from works and the latter saying that the patriarch was justified not by faith alone, but by faith and works?

Well, the Catholic would say that Paul is not concerned with answering the question "What kind of faith justifies?", and likewise, James is not addressing the question "What kind of works do not justify?" In fact, it’s the other way around. Paul’s concern is to dispel the idea that the works done by the Judaizers (and by extension, by faithless Gentiles as well) can garner any favor with God whatsoever. James's concern, on the other hand, is to dismantle the notion that a mere cognitive assent of the mind can justify anyone. But, Rome maintains, what both writers agree on is the idea that a living faith justifies.

So as you can see, both Protestants and Catholics insist that certain words are used equivocally by Paul and James, we just disagree on which words those are. The Catholic maintains that they are using "justification" identically but are using "faith" and "works" differently, while the Protestant says that the interpretive key is the different definitions of "justification" that are in play (Paul's has to do with legal acquittal before God, and James's with demonstrative vindication before men).

To the Scriptures, then.

Avoiding the silly accusations that fault Catholics for not being more Protestant and Protestants for not seeing things like Catholics, which position makes the most sense out of the data? And can either approach be adopted by either side?