What should we do with Russia's security proposals? The obvious temptation is to dismiss them as propaganda and reject them outright. I'd argue this is not the best approach. Instead, the package should be "untied" (to use a term that made the 1987 INF breakththrough possible).
Consider e.g. Article 5 - the undertaking not to deploy INF and shorter-range weapons. This is a constructive proposal that would help strategic stability. Reject? No, pursue and see what happens. 
What about Article 3. Russia's proposal to improve coordination to prevent accidental escalation, especially in the Black Sea and the Baltics + an undertaking not to see the other side as the enemy. Reject? No, pursue and see what happens.
Article 2? Improve consultations, including in the context of the Russia-NATO council (fairly constructive in view of Russia's recent rhetoric about ending all business with NATO). Hot lines among NATO member-states and Russia. A bad idea? Not at all. Pursue and see what happens.
In short, it's important to separate the wheat from the chaff. That's why NATO's response should be to engage (which would also erode Russia's propaganda gains from an outright rejection). Untie the package. Dump the unacceptable. Pursue the reasonable.
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