Hi chance,
I've just looked up in the dictionary to check "hang out", it says "to spend some time with somebody": the reply you're mentioning sounds a bit odd, besides "di grazia" is a sort of old-fashioned style that makes me think of some nineteenth century novel

That said, if someone asks you to go to the cinema, or theatre, or invites you to have lunch/dinner together, you'd probably reply with "ok, dove andiamo?" or "va bene, cosa vuoi andare a vedere (cinema, theatre)?", "va bene, dove andiamo/dove vuoi andare a mangiare (restaurant)?".
The sentence "dove devi andare (di grazia)?" could suggest, for instance, that someone is asking you a lift: "Scusi, mi può dare un passaggio?" and your inner boy-scout essence makes you answer "Va bene, dove deve andare?".

Cheers!