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The second option.
Technically, the DTP books can't be set to free, and the only time they show up that way is if they're free elsewhere and Amazon price-matches under their "don't have a lower price elsewhere" clause that goes with one of their royalty rate options. Amazon also often doesn't bother to price-match and it only happens to a very few books, as far as I can tell.
Very occasionally, a smaller publisher/indie might possibly be able to get their book listed free for a limited time.
I know that at least two indie authors and two small-press publishers got their Kindle editions set to 0.00 for Read an E-book Week, though I've no idea whether this is by prearrangement or it was the pricedrop matching thing.
Also, I hope you don't take this the wrong way because I like your website and all, and this is probably just a personal thing, but when I see authors/publishers/bloggers manually edit in links to their wares at the very bottom of their posts, it's kind of a major turn-off.
I have forum sigs disabled in my user settings and when it looks like people are acting to get around my viewing preferences to push their product, it actually pushes me significantly towards the "never buy anything from these people or visit their site" side of the might-possibly-consider-this equation.
Anyway, hope this helps, and probably the best way to give away promotional free books is just to give them away directly.
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