SMWW Rulebook, page 21:
Some powers prevent a game effect (damage, drawing a die, etc.). This includes cards that “take no damage.” When an action is prevented, all of the effects of that ability are canceled, and that effect can no longer be reacted to. Costs for that ability are not refunded.
Since no damage is dealt, it cannot trigger anything, including Poison Ivy’s effect. So scenario #1 is correct.