Best move regarding my rental property

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I own a rental property that isn't making any money. My AGI is too high to be able to deduct the losses I'm incurring from it. Any ideas on what I should do?

The property is a townhouse, and was purchased new in 2004. Cost was ~$150K. The mortgage was a balloon ARM. I lived in it until 2008. I tried to sell it, but best offer was $120K so I kept the property and started renting it out. I hired a property manager.
In 2009, I refinanced the mortgage, a 30 yr fixed at 5.875%. The bank charged a higher rate because it was an investment property.
In 2010, I earned $10700 in rent. My costs were: mortgage interest $6400, depreciation $4400, association fee $1300, property tax $1900, property manager fee $750, liability insurance $160, other misc costs such as repairs, maintenance, etc $190. My overall costs were $15100, so I lost $4400 on this rental property in 2010. My losses in 2008 and 2009 totaled $7400.
I currently owe ~$107K on the mortgage.
My AGI in 2010 was ~230K and will likely stay the same or slightly increase in years to come.

Should I sell the rental property? I'm not sure what I could sell it for in this market, but I'm guessing it could fetch at least $120K. I doubt I could sell it for more than what I paid ($150K) anytime in the next 10yrs. How would the depreciation and the sell price affect my taxes after I sell the property?

OR, should I pay off the mortgage, and start earning income on the property? I have enough cash to pay off the entire mortgage right now. Paying off the mortgage would result in about $2K income per year from the rental property. Can I deduct previous years' losses against this income?

OR, should I just continue as is, losing money on the property every year? Is there any advantage to this? Should I refinance again? Since I last refinanced, rates have come down even more, and maybe if I shopped around more, I could get a better investment property rate. But there are always refi costs (not only dollar amounts, but significant amounts of my personal time).

Another question:
I stated on my 2008, 2009, and 2010 tax returns that I did not actively manage the property, so I did not deduct any of the rental property losses off my personal income. Had I stated that I was actively managing, in 2008 and 2009 I could have deducted some or all of the losses off my personal income. My 2008 AGI was $52K, and in 2009 it was $110K. In 2010 my AGI was too high to matter if I was actively managing the property or not. I'm not sure what it means to be actively involved or not. I approve the rental rate, the tenant, and any major expenses. I pay the mortgage, association fee, property tax, and liability insurance. Otherwise my property manager takes care of the rest. Am I actually actively involved in the property management? Should I amend my previous tax returns to get some money back? My job is in health care, not related to real estate at all.

Thank you so much for any input!