There is a 4th scenario. Tap leveling the same method as method 3, where you have say a level 20 mage, who can tap level a group of level 12s. How viable this is, depends on how many characters you want to power-level. I'd say this is the ideal way to level 1, or 2 characters at a time, more time involvement than having say a team of hunters or warlocks using their pets to kill stuff (if that works) to get operational tho.

Since a lot of people like having lots alts for cooldowns like mooncloth etc, it might be worth it to have a team at 35, 45, 55, etc, so that you can start tap leveling people at around level 20. Level 20's tag level 26's (or whatever is green to the 35's) and the 35's mow down the tagged mobs. Warlocks would be amazing for this, since they can AOE, but also just auto follow, and load mobs up with dots while the lowbies run tapping stuff.