I'd prefer the players didnt know the rules, aside from how their very own abilities work. I voted for option 2, but, as an example from last night's session, we have a month of downtime, and some spare cash to spend on equipment, etc.
So, I say, I want to sell this magic dagger(I'm a half-orc Barbarian) and get 3000gp worth of admantine. Can I do it? the 3 other players spend the next 45 minutes debating how long it will take, how likely it is, whether we have the time, the effects of this on our downtime, until finally I say, "Are you the DM? No? Then shut up. I am not interested in your opinion or your ruling. I am interested in the DM's. Can I get the materials."
DM says yes. Then we spend 45 minutes more arguing over my crafting it. Finally, I look at the worst offending player, and I say, "Shut up. How does this sound, if 30 days isnt long enough to make my Axe, I continue making it while you all leave and go on your way. Now, until you become the DM, I am STILL not interested in your opinion." DM says, Takes 30 days. Then, its made, and since you took 10 on the craft check, its all taken care of. Then player A says, "But taking 10 on a check takes extra time, it cant be done in 30 days." To which I respond with a withering glare.
You know what, I'd rather have heard, "You get the adamantine, and make your dagger" in 3 seconds, instead of debating it for 90 minutes. Rules knowledge is a 2 way street.