Given the choice, I would prefer to sacrifice as little simulationism as possible, if possible. Rolling back time and doing something different is a possibility, but would feel clunky. It would be nice if there were a way to organically continue from where the chapter ended, although I'm not wedded to it.
With regard to QM preferences, my preference would be some form of Option 2: Hazō survives and continues in the same context, but with legitimate knowledge of Orochimaru's betrayal on which he can now act (as opposed to a rollback and OOC knowledge). That said, I wholly agree that there won't be a better time to reconsider quest fundamentals (unless Hazō gets killed again), and that might mean going for more exotic options for the sake of long-term benefit.
I do like Option 3 (if Hazou keeps DotB in some form) a lot. But taking into account the other options eaglejarl presented and Vel's preference for continuing interaction with the Human Path, here's a semi-minimalist concrete proposal that addresses some structural issues of the quest so far:
*Issue #1 - Hazou is forced into research because the impending worldly events require it (the Great Seal, the Rift, Akatsuki's siege, etc). In general, the stakes are high and this has exhausted spoons from all sides.
*Issue #2 - Hazou cannot do some things that both players and the GMs would find interesting (frequently get into high-stakes fights, for example), because even peer-level fights carry massive risk of death and quest end
*Issue #3 - Simulating even just the most relevant parts of the world is immensely draining on the QMs, long stretches of research exacerbate this
Scenario
*Orochimaru kills Hazou. Hazou's chakra system explodes, reducing his body to a bloodstain. The explosion was loud, his remains destroyed to the point of uselessness, and Orochimaru's reserves of both chakra and time are heavily constrained due to paranoid-level precautions in continuously moving and defending the rift. He departs as quickly as possible.
*As per my earlier post on the Jashin Option, Jashin grants Hazou regeneration for the reasons cited there. Hazou recovers from his otherwise-fatal wounds; slowly at first, but quickly ramping up to Hidan speeds.
*Jashin can see that the trajectory of this coming world war will decrease the aggregate number of souls in the Line, possibly sending the population into a death spiral from which it will not recover. The priority now is preserving Life, not causing death. It informs Hidan not to stand in Hazou's way and to vigorously oppose even Akatsuki if they would impede Hazou, so long as Hazou is generally working to promote life. Jashin will occasionally send Hazou on missions to do so.
*It is no longer practical for Akatsuki to besiege Leaf without grievous losses; Hidan turning coat means Leaf would have (Runes, Cannai, Enma, Tsunade, Naruto, Hidan) versus (Itachi, Kisame, Konan, Sasori, Crow Boss, Shark Boss), plus all of Hidan's inside information on Akatsuki. If Sasori died in the RER barrage then the odds are even worse. The appearance of internal dissent and the lack of a Rift to point to means Akatsuki can't get the rest of AMITY to take military action. Konan can't leave Rain for an extended siege anyway.
Results
*Everything branches off the Jashin intervention point, so this is a fairly parsimonious single change (if we even call it that - the washerman would do
something to try to stop the flow of souls from being annihilated, especially if Mari's offscreen preparations are such that eliminating her alone doesn't stop the deadman's switch)
*Hazou's now hard enough to kill that he can be sent into the field, especially on the Seventh Path or against chakra monsters where capture is less of a concern. If he does get captured by anything short of an S-ranker, Hidan will arrive to bail him out in a couple of months.
*The world settles into a stable equilibrium where not much detailed modeling is necessary: Oro is investing all his time and energy ducking the combined efforts of the world to find him and the Rift. Akatsuki can't defeat Leaf and Leaf can't defeat Akatsuki. The other countries are mainly interested in maintaining their defenses. The static nature of Runes means they are mostly useful for static area effects, so Leaf's S-rank defense doesn't translate into offense.
*Jashin requiring Hazou to actively undertake various Uplift projects, plus the FP cost for prep days, means Hazou can't just sit back and research military Runes all day. If Hazou's build is too screwed up to fight effectively, Jashin can offer large XP bonuses for completing his missions.
*Hazou can now focus on lower-stakes or at least less urgent matters like restoring Leaf, general Uplift projects, and figuring out the Greal Seal.
. You ninjaed me!