I think suggestion (1) & (2) are reasonable. There were several similar plans suggested in this forum in the past.

For suggestion (3), provided that similar quality teams are still grouped together, I think limiting levels of teams in same Cup can only be implemented by grouping fixed levels to same cup. For example, level 1 & 2 teams, level 3 & 4 teams, etc. are grouped together. This has also been suggested before. In this case, level 2 and level 4 teams are higher level teams and have competitive advantages. To be completely fair, Cup must consist of same level teams only. Without noticing even better plan, I prefer keeping the current multiple level cup structure, though I could only win Cup for once or twice about 3 years ago.