I'd look to 2) or 3) if you can't go with the 8" underseats on your first option.
I can't see that 6" underseats are going to give a balance to the sound - you'll be missing all of the lows. It'll likely sound like a very good AM radio, and no better.
Definitely replace the speakers (they ARE the worst known to mankind), and amplify. If there is ANY way that you can find to go to a decent 8" underseat, do this as well.
Dynamat is not really necessary in the doors (it's a BMW not a Honda), so you can save some money in that department.
Good luck, and let us know what you choose and how it works out.