A Great Hypothesis Don. Thank You...
The second has a flaw I find much greater. It assumes the instructor is perfect. If the instructor is not perfect, then you will learn imperfect technique. Then if you are not perfect, the technique you pass down is also flawed further. There is also a grave danger of creativity in this setting.
However, this statement needs further reflection... You may want to reason this out because this is based on a False Assumption....
This assumes the Instructor "Thinks" he's perfect and does not continue to evolve his own practice and pass this on to his students...
In my case up until the day he passed Shoji Nishio Shihan was looking for ways to improve his Aikido Practice and always pushed his students to improve thiers.... Nishio Shihan always insisted that In order for our Aikido to be considered a Martial Art it must
be effective against other Martial Arts.
We have both been around the block... How many Gendai or Koryu Shihan have you run into that have thought they were perfect and needed no further improvement? I have met a few and if you're like me Don you're out the Dojo Door in about five seconds
Too much Ego on the mat. LOL
Why even the mindset "My practice is perfect and there is no reason to improve my transmission of it" goes against the very essence of what Asian Martial Arts are all about.
If folks have a problem with some forms of non-sparring practice it is because the pace of improvement is slow compared to a sparring practice but that is relative as well. It can also be hard to measure the results of non sparring practice because the only real measurement is how the individual feels about it. Kata is a whole other ball of wax but let me tell you I have experianced turning hundreds of hours of supervised Kata into effective technique when I needed it to defend myself.
We are all given the same set of tools as O'Sensei (to paraphrase) once said. What kind of practice you develop is entirely up to you, and he warned against relying on your teacher to transmit your practice. How you receive and embody it is up to you too.