+1. I've taken the third route once before to good effect; the other players were fine with becoming his elite guard, generals, and advisors. Political intrigue can take some creativity but has a huge amount of potential. See Game of Thrones, Shakespeare, I Claudius, and so forth for ideas on how this might work.

This is essentially how I handled it too. It's too hard to be consistent and fair, and some players are just more into it than others. Declare that +X pts awarded to the team due to the roleplaying with so-and-so; let the party decide how to divvy the points out. They may choose to divide them evenly, give them to one player if they admired their RP work, or use them to help level up a key character.