My choice would be option 1, at least initially. Council stays the same, e.V. electorate is separate and consists of real people willing to give their info to the proper authority to become a legitimate member of the group.

In the end, if Council is really not needed, it will effectively terminate itself. Either by having the same members in it's body as the e.V., or simply from lack of people running for it.

I think any of the options is somewhat doable, but option 2 is harder to pull off. I'd frankly advise against that.

There is, of course, a 4th option: Turn off the lights and move on. But I don't think everyone is quite ready for that yet.