2 - mitigate (buy ELT, dinghy, wear lifevest, file flight plan) etc
This is definitely the most pragmatic approach - again you will have to make your own decisions about this as its your life!
For example, I generally don't hesitate to make the short channel crossing (say DVR - LFAC or LFAT area) as long as we have vests and wx etc. is reasonable.
I have made longer crossings a few times too, e.g. SFD - DPE or the designated VFR route from SAM to MP, but these are longer crossings so generally speaking I prefer to have a raft and ELT as well - these can be easily hired from SEMS Aerosafe (Tel: 01268 534427) at reasonable rates if your club doesn't have these. I have so far baulked at longer water crossings.
Hope this helps,
Andy