In general I stay off the sidewalk and I would probably go for the side street (option 2) for the OP. That said, I also ride the sidewalk 1 mile each way every single day commuting. My other option is to ride the right lane against the curb of a 5 lane 45 mph road in the dark.

Some facts:
1. I will never in a million years get stopped by a cop for sidewalk riding in Detroit no matter the law....99% of cops think that is where I belong.
2. There are no pedestrians or cyclists in metro Detroit. 99.9999999% of our hugely fat population drive everywhere.
3. When I'm riding the walk, I just drop it down three notches and cruise at about 12mph. I'm just as aware as all of you the risk of traffic crossing the walk without looking and I take it into account.

Fundamentally I ride in the street and I'm glad my route to work is so accomodating for the 11 miles where that works. Faced with challenges though, take the sidewalk, take the other street, take whatever works.