Option 1.
Republicans have no respect for the Constitution.
Just curious, how do we have no respect for the Constitution? McConnell and other Senators have just as much a right to vote down Obama's nominees as Obama has the right to nominate them.
Its not so much that anything McConnell and the Republican Caucus has done (or threatened to do) is blatantly illegal as it is that it goes against the spirit of the Constitution. The argument put forward by Ted Cruz and others - that Obama should not nominate a replacement for Scalia because it is an election year - it patently absurd and has no grounding either in precedent or in the text of the Constitution. As stated by yourself and others in this thread, the responsibility for filling vacancies on the Supreme Court rests with the sitting president, not the would-be future president. It is beyond clear that McConnell's only objection to receiving a nominee in 2016 is that the incumbent president happens to be a Democrat - were Mitt Romney in the Oval Office today, no member of the Republican Caucus would have batted an eyelash when he moved to fill this unfortunate vacancy.
You are correct, of course, that the Senate is not Constitutionally obligated to confirm the president's nominee, and were Obama to put forward a blatantly partisan candidate - say, Debbie Wasserman Schutlz - I would expect that nominee to be flatly rejected. To refuse to consider
any nominee, on the basis of a warped interpretation of presidential authority concocted for exclusively partisan reasons, is a wholly different matter. No-one will send Mitch McConnell to jail for this act, but he should be ashamed of himself for politicizing the last quasi-nonpartisan institution in the national government. (Yes, I am aware that Democrats have done the same thing in the past. Such is deplorable, but it does nothing to change the fact that in this instance Senator McConnell and his colleagues are on shaky moral ground. Two wrongs don't make a right.)
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