+1 Door #1
Very probably a face and chase is all you need. Of course I can't say for certain without it in front of me, but it's unlikely the threads are so screwed they can't be salvaged. Obviously, you need the tool and a non-gorilla mechanic that knows how to use it.

+1 also on a modern cartridge BB. It will help keep things aligned going in. The no maintenance aspect is good too.

I suggest blue loctite as well, at least on the fixed side, maybe both.