I can't help you much on the sizes, but a suggestion on something you will want to look into if you go with option #2. If you are running a long beer line I know that you will need to calculate the resistance in the beer line to make sure you have enough pressure to get a good pour at the tap. Also, cooling will become an issue. With the long beer lines your beer will warm up by the time it reaches the tap and cause excess foaming. I suppose the extent of this would depend on how long you need to run the lines. Again, I have no experience running long lines, but you should look into this.