That does sound aggravating. I know what you mean about companies wanting to hire people from outside. I don't fully understand it, but it's generally political. It sounds like you don't want to get messed up in that. As nice as it would be to make some extra cash, it doesn't sound like you need it. Congratulations on being in a position where you have "f-you money", as jlcollinsnh likes to say.
Now, that being said, it doesn't sound like you need to say "f-you" quite yet. If there's still a chance for diplomacy, I say try that first. It sounds like just a year or two more of your current job will have you set for FI. If I understand you correctly, you save 5X per year and you're already at 20X, so you're just about ready to take advantage of the 4% rule. Any more on top of that is gravy.
I don't think you should turn down the promotion outright, since that wouldn't likely gain you anything. They could still try to pile on work for you. I also don't think you should just do the work without saying anything. You don't absolutely need this job to survive, as discussed above.
I think your best bet is to do something more like option 2, as diplomatically as possible. You are in the right, so reasonable people will understand. The worst they can do is fire you (sounds bad for most people, but keep in mind the above), and it would be without cause. From the sounds of your position, I would think you would be entitled to a good severance if they went that route. I think it's unlikely, though. Since you're being considered for the promotion, I think you're a valuable member of your company. They probably want to keep you around.
Overall, there's only so much work one person can do. If you aren't given enough people to help with the task, it's ultimately not your problem. You don't own the company, right? Enjoy going to work, knowing you've almost achieved FI!