I think we are in violent agreement, just with different terminology. I’m not sure what ‘double natting’ means, but the upshot is that two routers with DHCP are fighting it out.
I agree that option 2 will probably not work. I mention it because it is the way TP-Link leads you. I think they should make ‘Access Point’ their default, and point out the difficulties in making their device a ‘Router’! The ‘Router Mode’ option is really only viable if you connect directly to an ADSL modem; and no one does that … 