Source: Isaiah notebook, 11/12/10
The vineyard is in a very fruitful hill. It is full of possibility. It is overflowing with potential.
The steps that the Lord takes are: first, build a fence and set a boundary, secondly remove anything preventing Him from moving forward.
The third step in verse 2 is that he "planted it with the choicest vine." Doing that requires some skill and character attributes. He would have to look and the entire vineyard and do an inventory of all his assets, possibilities, and potentials. Then, he would need the foresight, patience, and skill to determine which of these was most likely to bring about his work. And then he planted it.
The Lord does not know which one is the choicest just by magical means. He is omniscient, because he has perfected all personal skills, and employs those same skills in His work. (See also 3 Nephi 23:7-8, or 6-13 for more context)