I choose: Option 4) None of the above.
Personally, I'd simply rule that the damage provided by the power trumps that given by the longtooth shifter trait. How would the power know that the shifter may or may not be able to do more damage while shifting, so as to take the highest of the two?
Beyone size, which is explicitly mentioned in the power's description, I don't see the power as particularly caring what features the manifestor starts with. I also don't recall any rules or reasons for the powers to stack, or for the damage die to go up other than for size changes.
Cheers,
Vurt