Scenario 1 is completetly broken...
I don't think "completely broken" is a fair assessment - not in the way Y-Zone from Season 1 was clearly broken.
It's more like the case you have with City Blocks, where if you choose to play in an entirely unthematic and boring way you can exploit the rules of the game to your advantage.
Personally I wouldn't want to play with any group that wanted to play that way.
That's not to say there's anything inherently wrong in playing that way, just that it wouldn't be my personal preference to play that way.