Personally 1 - ie set the cleared alt/FL and let VNAV take care of intermediate stop alts. I've never had ATC check on whether we intend to stop at the intermediate stop alt.
On a similar subject, a recommendation from the BA 777 accident report was that cruise step climbs should involve the use of full climb power - staying in VNAV for this will do just this but VS (as the BA used) - won't.
I've always used VNAV for step climbs because I have a vague memory of a notice that said that other aircraft's enhanced TCAS knows your stop altitude, so high rates of climb are not a problem when using VNAV (contrary to the belief of a few fellow pilots who chide me for not using VS). Does anyone remember this notice or did I imagine it? I also dont use VS in the climb for the simple reason that there is no speed floor protection.