I dont know what to say exacly cannon but i believe thata the example you used in level 2 is bit too extreme.
I would have to say that i am for choice number 3.
The admins are there to guide the players who want to participate in changing of the systems and changing the roleplay.
Going with pure number 2 you tend to create problems we cannot adjust to yet. We all know that outcasts are more popular than LN and we all know that those battles would turn into capfests for no reason, and that in meantime there would be no roleplay drawback for OC that their entire fleet is in liberty.
I believe we are not ready for pure level 2 but that admins need to work hard with the community that wants to be independant. For example we still do not have a fully developed and organized house, with payrolled military and police, with developed judical system or things like that. My primary concern atm for this server is buffing the lawful activities, and that should be done purely trough roleplay and not game mechanics.
As i said before, keeping them on payroll and allowing them profits from confiscated smuggling (cardy, artifacts) would allow them to get profit and even become corrupted. Corrupted cops arent a big problem, actually they breed more roleplay and they give secret police something to do. To police the police.