As I've been exposed more and more to college baseball I've actually become more cynical and disappointed. From what I've learned in the past few years I would definitely not recommend the Option #2. Those guys are there to collect a paycheck and scout other players. Half the roster being good and half being bad means half are good and half are walking checks, meaning they're only there to fill out a roster.
Play with the best players and don't stop until he can't reach a higher level. I'd play up at 16u this summer. If that is not an option I'd be joining team 3. Reps are nice. Quality reps are better. After freshman year I pulled mine off the cushy team with all this friends he had been on since 10u and put him with a regional team. At 16u I put him with a national team where 5 were drafted out of high school. Nobody has ever said playing with/against the better competition was a bad idea