Old/Original Proposal for Second Stage Reuse
Second stage reuse for Falcon 9 was a planned feature that has been discontinued. In this old render(Shows a Falcon 9v1.0 with square engine block) you can see a reuse plan very similar to what you described. The second stage nozzle would retract into the tank structure, small legs would deploy, and smaller engines(kestrel, draco?) would perform the actual landing.
However, second stage reuse is hard. The first stage is a massive beast that does most of the heavy lifting into orbit. However, the second stage provides most of the speed. Once the second stage inserts Dragon into orbit, it would need to have enough fuel to deorbit/intersect the atmosphere then use a heavy heatshield to reduce its velocity on reentry. All of these things add weight.
Due to the nature of staging and the rocket equation, roughly every 4 pounds of dead weight on the first stage takes away 1 pound of payload. On the second stage it is a 1:1 conversion. All the extra weight for reuse(heat shield, legs, extra fuel, machinery for nozzle retraction) take away from the total payload mass.
SpaceX already has an inefficient upper stage relative to most launch providers. Their use of Kerolox on both stages simplifies design and tanking but means that the second stage Isp is much worse than a cryogenic Hydrogen stage. Now why did SpaceX change their mind? Elon Musk explained this at the MIT Aero/Astro Centennial. When asked about second stage reuse
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