You biggest issue with smoothness and harshness will be running E load tires. You should be running C (or D at the most) load rated tires if you want the best ride. Take it from someone who has run both, the E load tires ride like complete crap compared to a C or D.
In addition to that, run them at 26 psi and you'll think your vehicle has totally been transformed (that's what most of us run ours at on-road).
The Fabtech lift is just okay. The worst part of it (and most lifts) is the shocks. Replace them with Rancho RS5000X shocks for the best ride quality you'll find (this is coming from someone who has run almost every off the shelf shock you can run, including the Bilstein 5100s).
As far as control arm lengths, don't be too concerned about that. I have a 4" suspension lift with 1" body lift, and my lower control arms are at stock length believe it or not. This is actually very normal. It's the upper arms (just in the rear) that will change dramatically in length, to compensate for the raised pinion angle.
If there is enough room in terms of clearance, the lower arms can be adjusted outwards. However, the issue with that is that you may run into other issues. For instance, if you move the rear axle back further, your bump stops can become off center, your rear diff can contact your fuel tank, things can bind up with the track bar, etc. You shouldn't be concerned with the actual lengths of the control arms, you should be concerned with how everything works together, whether things are aligned or not (i.e. bump stops), etc. Worrying about actual numbers is senseless.
With option 1, If you have a 4" lift on a TJ, you will NOT be able to remove the transfer case drop. You will get vibrations at 4", guaranteed. Unless you either have a SYE and CV driveshaft combo, or you have an LJ, in which case the longer wheel base lets you get away with a lot more than it would on a TJ. Even with the MML, 4" is still a lot of lift.
Option 2 is the best bet. The Fabtech springs are fine, it's the shocks that suck. Pair the springs with Rancho RS5000X shocks, add a SYE and CV driveshaft, replace the poly bushings with rubber (you'll need adjustable rear upper arms to change the pinion angle), and you'll be good to go.
Add a 1" body lift and 1" MML down the road if you want as well.
And I'll say it again... get rid of those E load tires. Those things aren't meant for a TJ, that's for sure!