My D17 had a teacher for APUSH last year who had an outline format for each chapter of their text book that—while not quite as odious as your teacher’s system—drove her around the bend. But it was required, and a big chunk of the HW grade, so D slogged through it. So, I would suggest doing your 1) and as @halcyonheather suggested, try colored erasable pens. I know it will add time, but any other option is likely to raise this teacher’s ire, which is not something you need at this point in your school career.
(Of course, D’s school doesn’t give an automatic A for getting a 5 on the AP test, if it had, maybe she would have risked #5! But I doubt it, she’s pretty law abiding. 
)