I vote for Rentahamster's option two.

I like being able to set my stats as I please regardless of effectiveness. If I want to be a mage tank Lalafell with a lot of VIT I should be able to do that.

Cutting down on options makes it way to cookie cutter.

You shouldn't be able to do it when engaged with a monster and there should be a cooldown between fights/class changes to prevent abuse of it but nothing drastic like half an hour. The current time for KO is fine.