Ok, so it looks like I'll stick with #1 then. (And I've got some yard work and hiking planned for this weekend ;) )
About taxes, yeah, it does seem like a lot, doesn't it? But only $18.50 is federal income tax. The rest is local, state, FICA, and health insurance, and there's not much I can do about those. (And state and local I always end up owing a little) I do need to optimize the saver's credit, but I think I'm close.