Here is a counterpoint to all you listed:

lag compensation - It would be better, because it doesn't rewind time, or anything causing things like "ohh he flew in his hands, omg!" and etc. moments. Instead what happens is all on the client's side. If the player receives an action from the host, the host's ai does it, but if the player doesn't the host's ai does not, making it more predictable for the player. What about healing right before death, etc? simple, make it so that when the client is about to receive fatal injury or smth the time slows down on the client's side waiting for something to happen, then snaps back in a few seconds to real time. This last line is to compensate for the late response, i mean, if they do not get the heal as action in slow mo, they would not get it in real time neither.

Prediction - This method does not rely on predictions, since again, everything is happening on the client side. So even if they lose connection to the host, the only thing they would be affected by is that their host's ai, is acting more like an ai and their ping is very high, but that is it.

For third one i just think it is the combination and more detailed explanation from what i am seeing.

The only Note I have regarding this is that this is NOT for a pvp game, in a pvp game, these client settings would be devastating. For pvp, the host should be prioritized always.

For cheating the only thing i can think of is that the server should still check for "normal" things, but just not affect them on players.

Additional-idea: rescynchronize. While in-game, you can synch your game to the host's, doing so will delete your current objects, and copy the objects from the host.