Speaking ASA SP.....
Not a definitive answer, but I remember bringing this up in rules discussions because ASA changed the rules about this before last (2002) season. Fortunately I haven't faced the situation yet because I think blues have been given a clunky way to handle this. (Hope I'm wrong and someone like Mike has a more elegant answer.)
The way I read all the written change advisories I've seen is: Yes to option #1, Blue is supposed to KIND OF award the runner the bases she would get on the overthrow...BUT if she doesn't then return, on her own (against the umpire's seeming "order"), to tag the missed base, and she's then appealed at second, you then must overrule yourself and call her out. (This wouldn't arise in your scenario because the offensive coach is on his/her toes and is ordering the runner back.)
You don't allow the attempted appeal at 2nd because though the ball is dead the play in this case hasn't completed yet, the appeal has come too soon.
And I know there's some rules situation (which may not apply here) saying that runners can't return on a dead ball thrown out of play unless it is clear that the throw out of play was to keep the runner from retreating; I don't know what relationship that has to this situation. (Okay, Mike, don't have a cow that I can't cite section numbers, it's late and my book is downstairs in a junky basement I just can't face on a five-degree night.)
But if the above is correct, I'm still not sure what language I would use to make it clear that home is a CONDITIONAL award that can be safely cashed only if she follows the re-tag procedure (and somehow not telling her what that procedure would be).
I can just imagine the hell that would erupt in my games if I awarded a runner home and then called her out at 2B. If I were the manager I'd tell the blue "You told her she had home." And I think the manager would have some justification for feeling double-dealt. It IS craziness, you got that right.
Then again, the guys and gals I call for ain't the sharpest crayons in the plastic bag anyway. In one co-ed game I said "take second" to the male batter after ball four so he'd know he was entitled (it was early in the season and most players weren't yet tight with the surpassingly weird co-ed walk rules). Doofus immediately set out toward second ... STRAIGHT toward second ... right across the mound. Wasn't he surprised to be the victim of a leisurely appeal out. "Duh, hey, Blue, you tol' me ah could take second!" Yes, dolt, but most runners who get to second arrive by way of touching first. Still, in tribute to this enduring stupidity, I changed my practice and quit telling walking co-ed male batters to "take second" ... now if I tell them anything at all, it includes "touch first" as a necessary first step. Maybe I should add, "and don't forget to lay down the bat."
-- KENTUCKY "Help, My ASA City Officiating Corps Has Been Hijacked To NSA Effective in Three Months, Where's The Catalog, I Need All New Stuff" BLUE
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