1- Report myself prior to him coming to hang out any weekend where it's likely we may both play? ( I plan to report myself weekly to make sure it's known I'm boxing)
2- Report myself but still not have his guy grouped with my 4 when he's in the same room and on the same IP?
Neither.

So long as you are genuinely not multi-boxing with his account, it's a non-issue. Blizzard can readily tell the difference between somebody who's multiboxing, and somebody who just happens to be playing at the same address.

If you search for the expression "same ip address" (with the quotes) then you'll find some threads where this has been discussed before.

edit: remove my opening paragraph now it's been split from the original thread