Blokes in my vintage did all our theory subjects through to SCPL (ATPL) out of books. The old college of knowledge served us well. But so did Dyson/Holland and a few others in providing study material. Of course a good supply of past or sample exam papers helped to measure the knowledge levels. If you could complete a past paper in about 70% to 80% of the time allowed and still get near 100% you had the exam in the bag.
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The thing about self-study is you are able to pace yourself. Just a couple of hours a day working through the books in a logical manner is all that is needed. With a bulletin board like this there are plenty of advisors on difficult material. Work through the past papers after you have completed the course. Assess yourself on time and accuracy. Those areas that require more work can be addressed before tackling the next paper. Be self-critical.
Many full time courses teach you to pass the examination rather than gain the knowledge. Conversely self-study gives you the knowledge; the past papers help to understand the examiners way of writing questions. Option 1 may take longer because of the structured method to cover the syllabus combined with too few lectures per week. In the long run I guess it is a personal preference.
I have run a few self-help courses using Trevor Thom and found them to be an excellent source for students. The information is presented logically and well illustrated. If you study rather than skim you will understand the way all the pieces fit.