There is a 5th option:
#5 Enter the eBook market now, with geographic restrictions that match the existing contracts. Only allow your ebooks to be sold by retailers located where you have rights to the ebook. Don't worry about how the ebook store enforces geographic restrictions.
- Pros: Get their feet wet with electronic sales now. Avoid sullying business reputation.
- Cons: Get sued by one or more of your authors (or your author's other publisher), e.g. for selling to a Canadian from a US ebook store.
So far as I can tell, option #5 is what every single UK publisher who sells ebooks is doing at present. They may even be skipping the geographic restrictions step, since I have never seen a geographic restriction in the UK. It may even be the case that every single publisher world-wide would be happy with #5 except Hachette.