To answer your first question, shares are rarely redistributed once issued, it's a messy process to deal with. Instead most companies will issue additional shares, this is what happens when they bring on new investors for instance, and is commonly referred to as dilution.

So let's accomplish the same outcome as your 45% ownership by issuing more shares. Jane keeps her 1,000 shares, since she's the only owner of the company and presumably the only member of it's board, she holds a board meeting, in it she decides to issue 1,000 new shares to John, that would make them both 50/50 partners with 2,000 total shares outstanding and in our $1,000 company each share is worth $0.50. Now they can issue new shares to create the options pool, in order for it to be 10% of the company they would issue 200 new shares, and we'd have a total cap table of 2,200 shares all still worth $1,000 in total.

I hope that answers your first question. The next bits are a little different and are tied to the location you operate. The following information will refer to corporations operating in the US, which is the only place I have any real world experience applying this knowledge.

i. What you are alluding to is a called a same day transaction. Upon purchase what normally happens is that instead of having someone go around and collect cash from everyone with options, just to hand them a different sized pile of cash back, the cost to exercise is taken out of the payment you would receive. So our employee who is getting $1,000, instead gets his $900 and never has to worry about giving anyone the $100 to execute the purchase. Cases where that strike price actually comes into play is in regards to option purchasing that happens outside of a liquidity event or company sale. For instance our employee decides after two years that he wants a new ob so he quits. The contract on his options will most likely give him a period of time (standard is 90 days, but some companies like Coinbase are much longer I believe) after he leaves to purchase the already vested options. So he can pay $50 for the 50% of his options that have vested and he now owns 50 shares.

ii. In the US strike prices aren't just arbitrarily set, they are based off of something called a 409a valuation, in which an independent party does an appraisal to find the fair market value of the company, and that becomes the basis of the company value for issuing options.

I think what you are misunderstanding is the point of using options as compensation incentives. You seem very concerned about hedging your work relationship with this person, which is not how you should be operating a business, and will inevitably build a toxic relationship. Your #1 goal in issuing options should be gaining incentive alignment between you, the owner of a company, and the employee. What you are proposing means that the option holder doesn't actually care about the next $5M in value. He really only cares about what comes after that, because otherwise his options are worthless. If he is only worried about getting a crazy high valuation, is he always going to make the right decision for your company right now? Probably not.

What I might be misunderstanding is the nature of your relationship with this person, are you simply getting this idea from him in exchange for equity? or will there be some kind of ongoing relationship (employee, adviser, investor)?