I choose the third one. Let me make this simple, the more hoops teachers have to jump through and the more that they have to fear for their job security, the more bad teachers will be in our schools. I'm in a state that has abolished tenure, and there are still bad teachers. Bad teachers can devote their time to gaming the system while good teachers are too busy teaching. Bad teachers have lawyers at their disposal and know their contracts as well as employment laws backwards and forwards, avoiding nearly any type of discipline against them due to the threat of embroiling the school in money and time-consuming lawsuits.
While bad teachers protect their careers, good teachers (even average and great teachers) need to spend an amazing amount of time just focused on their students, their subjects, staying current with new standards, and understanding new technology. Every hurdle put in their paths keeps them from doing what people say they want them to do: teaching students. I have seen too many good teachers leave the career, both voluntarily and not. They burn out or are shoved out by inept administrators whose educational "vision" is contrary to what actually works with students.
The truly sad thing is, bad teachers are made. They are created when good teachers have been broken down long enough that they don't care anymore. They are created when good teachers need to spend all of their time keeping their jobs rather than doing their jobs. They are created when a public that claims it wants the best for its children keeps demonizing the one group of people who have dedicated their lives to actually giving their best to those same children.
We need to stop creating bad teachers.