I would go with option 1. Since you clearly want to keep your chickens (and good for you for wanting to do what's right for them) and they don't NEED to free range, there's really no reason not to keep them confined in a run, and 10x10 is certainly adequate for 7 birds, especially if you throw in some "fun" things for them to do, like a swing or branches to perch on and browse to pick through.
I don't feel bad at all about keeping my flock contained in a run and the few times they've gotten out, they've stayed by the run fence and waited to put them back in. Like your BF I don't want poop everywhere, and your neighbor is being reasonable in their request, so no reason not to comply.
I don't feel bad at all about keeping my flock contained in a run and the few times they've gotten out, they've stayed by the run fence and waited to put them back in. Like your BF I don't want poop everywhere, and your neighbor is being reasonable in their request, so no reason not to comply.