But those are not mutually exclusive choices. You can have the possibility of failure without sidelining (except in the case of Death).1. (a) The "consequences r lyfe!" crowd v. (b) the "playerz just wanna have fun" crowd. In essence, (a) believes that the game is more fun with the possibility of failure, and (b) believes the game is more fun when you are, um, playing it.
That's not the way it reads. If Option 2 is "Sideline, but Have Alternatives" and Option 3 is "You can have consequences without sidelining" then Option 1 is logically "Sideline without alternatives".Option 1-
Players can be sidelined; it is good, but not necessary, for the DM to have options available for the player being sidelined.
Having Option 1 Being "Maybe, Kinda, Possibly Have Alternatives If You Feel Like It" is... Not what I am getting when I read your opening post, especially since you presented your argument as if you could never have consequences without sidelining.