Thanks to all for the positive comments so far,
From the post above, it looks like you are already making headway into changing things around. It would appear you already have the in roads and connection into the club which is your first major hurdle (You have that) and it would appear you already have a group that are looking for something very similar to what I posted originally (Foundations are already there). There's no reason why someone dedicated would fail in pushing this forward, the ingredients appear to be there.
A few suggestions, looking in from afar, it perhaps needs more support from the club itself to push this forward and expand it? An advertisement campaign from the club to fans (banners/leaflets/emails/postal letters to all ST holders for next season for example) In this campaign, highlight that the club have a new '1894 group' and that this group have been allocated an area where ''Ultra'' type fans are required. Highlight that this area is for the good of the club, to increase the noise and atmosphere at games and that this area needs vocal supporters to better things. Highlight that this area is not a relaxation zone and that you will be required to sing and participate with the rest of the 1894 group (A caveat to state that ST holders who cheat their way into this section and then do not regularly participate will have their seat reallocated outside of the 1894 zone the season afterwards) Ask the club if this is possible, perhaps not as many as 3000 fans initially but say 1500 'ultra' type fans to get things going. (Numbers will expand in time, Celtic for example have about 10,000 now wanting into the 3,000 standing section zone and a waiting list on ST holders to get in) - These fans can be allocated to this new section through word of mouth, other known singing fans vouching for other ST holders who sing. The fans allocated to this new singing section can be approved by the members of the 1894 group themselves rather than randomly by the club. I think this area needs expanding between club and the 1894 supporters group.
Funding wise, ask the club for an annual contribution, it's in their best interests as the crowd can most certainly drive the team on. As you seen at Celtic Park for our 3-3 draw against each other. (The quality of the players in both teams is night and day) For Celtic, that draw earned them a bonus payment of £500k, peanuts to City but a reasonable amount for Celtic. At big spending City, an annual contribution to their official MCFC backed supporters group isn't a huge ask? You don't ask, you don't get.
The Celtic standing section is enclosed, you can't walk in and walk out of it from other areas of the stadium, there are stewards on the entry points and you must show a band that you belong in that section. It's very well organised in that respect.
Choosing an area is also a challenge, the green brigade at Celtic have chosen a corner section as it gives the guys in charge at the front best visibility to control all the fans above them. This video below paints a thousand words, it shows the corner location and the 2 guys at the front co-ordinating everything. Mega phones, the chants and even the movements. There's 3000 fans in that small section all following the 2 guys at the front. This then gets the rest of the stadium going.
The big one here I think is co-ordination, being instructed to sing what and when keeps everyone in sync and in rhythm.
I am of course not suggesting you guys should copy Celtic's setup outright, as someone else has posted, there are challenges including the demographics of your typical supporters. Season tickets in the £400 price range at Celtic Park, most probably double that cost at the Etihad (so may push out lots of working class types that can't afford it) Lots of other differences too of course but I believe you guys already have the foundations there to build on. Standing section will only improve that, we are all hoping here at Celtic that a 2nd or expanded standing section area is allocated next season as it has been a huge success, we could sell out that section 3-4x over now. I'm sure one day it will happen in the English Premiership too.
Anyway, I wish you guys all the best going forward, I'm sure you will get there in the end.