We look at each overdraft to determine if the item will be paid or returned. Each overdraft paid is charged a fee.
Since this is not considered an automated "courtesy pay" overdraft program are we required allow the account owner to opt in?

No, not for your standard overdraft program. And make sure you aren't charging an OD fee for the inevitable but hopefully infrequent one-time debit card transaction or ATM transaction that overdraws an account.