The short and slightly counterintuitive answer is that optimising for search engines isn't the most effective way to go about SEO; certainly if you want long-term, substantial development.
Why? Search engines are businesses with customers, and like you and your business, they want to give their customers what they want. Their customers want useful search results, which means search engines work hard to make sure that their search results - their service - isn't easily taken out of their control and manipulated by 3rd parties.
After each Panda or Penguin, there's uproar from a (disturbingly large) community of people and businesses who'd essentially built their livelihoods on some means of gaming search results. Any technique aimed solely at exploiting limitations of search algorithms to inflate a site's performance is very likely subject to the same fate.
Which of your options is best depends on which:
- serves your customers and potential customers the best
- represents the most logical and efficient way for you to provide that service
This already more or less rules out your second option, on the grounds of it being massively more complex and expensive at no gain for your customers (and, arguably, even a detriment to your customers).
Search Engine Guidelines
I'd also recommend looking at search engine guidelines to see just what kinds of activity they consider acceptable. Google's Webmaster Guidelines, for example, contain this:
"Avoid tricks intended to improve search engine rankings […] ask, 'Does this help my users? Would I do this if search engines didn't exist?'"
Their guidelines have a whole section on "link schemes", and their definition of such a scheme sounds like it might refer to your second option:
The following are examples of link schemes which can negatively impact a site's ranking in search results […] • Building partner pages exclusively for the sake of cross-linking
My emphasis above.
Do the thing that provides value for your customers and potential customers, and avoid anything that amounts merely to a method or scheme for building value solely with search engines.
If you build value for people, no search engine company can ever take that away and, furthermore, it's in the interest of a good search engine to reflect that value. If you only build value with search engines, neither of those things is true.