jayemm
The correct answer is to follow #1. Even if you are paying £120/hr self fly hire rate.
The alternative is to cut him up and land in front of him. This is fine if you know what you are doing, but nearly all of the people who have cut me up in similar circumstances didn't know what they were doing, forcing me to do a G/A. Sometimes several times in a row.
You are more likely to see a faster plane doing bigger circuits. This may be irritating to someone flying a slow plane who is used to the airfield and flies tight circuits, but the faster plane will also finish the downwind and the base and be on final that much quicker (I fly downwind at 110kt, then gear down and trimming to 90kt on base and do the final at 80kt) and he will catch you before you know it - you will never be off the runway in time for him to land.
The only time someone cut me up "right" was a pilot of some aerobatic plane at Duxford whose "circuit" could probably have been flown within the perimeter of the runway
