Wow, so sorry to hear this and of course the nightmare scenario for any Z4M owner. My personal opinion is to go with #4 if you have the time to spare/extra car to use etc. I'd consider #3 if it came with a warranty from BMW, which I think it does (2 years right?).
I'm very curious to hear what caused this, as it doesn't sound like any of the known traditional issues the S54 can have?
Best of luck to you, and believe me my heart goes out to you on this.
