Well in the absence of any input I made a command decision to go with approach (1). If it blows apart on its first flight, so be it. In case anyone is still reading this, here's the process.
STEP 1: EXTEND THE COUPLER
Basically I needed a coupler for two couplers up front: the short red one, already glued into the main body, and a standard-issue brown 2" coupler from BMS. Fun fact: the ID of the two couplers is quite different. The red Estes coupler is somewhat thicker-walled. This means I need adapt between the two.
First I took the yellow space that comes with the kit, cut a slice out of it, and glued it into the red coupler:
I could not immediately glue on the brown coupler because it would be too loose at the joint. So I glued a single layer of 110 lb cardstock around the yellow piece (not shown), which thickened it up just enough to have a good fit into the brown coupler, and voila:
It actually seems pretty strong, not janky at all. Both the exposed red and brown coupler surfaces have been CAed and sanded down for easy and smooth sliding inside the upper BT5. It needs a bit more sanding to smooth out the joint, although it would be fine if I left it as is.
STEP 2: ADJUST THE FRONT LAUNCH LUG
As previously discussed, the launch rod need to be angled ever so slightly away from the body to clear the slide. So I sliced off the old front lug, leaving the base intact:
Then I glued in a layer of cardstock to raise it just a bit more, and then glued in a new lug into this nice little bed:
I tested with a launch rod and it fits fine and slides easily without bending (slide piece is just dry-fit on there for now):
Sitting horizontally like that, the rod rests on the slide, but it actually has a fair bit of wiggle room available, so I think it'll be just fine. If the rod touches the slide a bit during launch, that's no biggie anyway; just don't want there to be obvious binding or friction from it.
To be continued...