Seems like an permission issue. Please verify ACLs on node-level to control which users/groups are allowed to create/replicate pages anywhere in the hierarchy. You can do this via the Security admin console and is specifically designed to control whether a user or group is allowed to manipulate the page hierarchy by creating, replication or deleting pages. Also check the credentials & permission of replication user agent .
From agent you can clear the replication queue.
Yes, this is the process that isn't working - it won't clear it. My questioin is - is there another way to delete this item from queue?
I have seen items get stuck in the queue before and refuse to clear. Usually there is some sort of confusion in the eventing/jobs that drive the queue. Depending on what exactly is happening the solutions will vary. I would turn the logging up on replication package to debug, try to clear the queue, and then open a daycare ticket with those logs to get help resolving the issue.