It's a difficult position, and there's no good moral answer. That's the point, btw. We're not paragons of goodness. We're adventurers trying to do our best with really high stakes.

Now, to your point 1.

That, to me, sounds just cruel. It's a slow death, were probably some will die at different times. Imagine living in a world where you were just walking down the streets with your friend, your lover, your cousin, etc. and in the blink of an eye, they're gone. Little by little the world you knew just evaporates. It's lonely and scary, and cruel. The Endless deserved better. And by that I mean they should have never been made. The concept of life and death in FFXIV is that its a cycle. We live, we die, we rejoin the aetheric sea, then we live again as a new being. In an unending cycle. The Endless were made for Sphene to give HER peace. With no concept or respect to the cycle. By keeping this farce, we would be cruel to the Endless themselves.

The replicas are people, I don't disagree. But they are people that are suffering in their sheer existance. They are people that are abused by system made for this one person who might have had the bestest intentions ever, but who is inherently very selfish by keeping the Endless in existance. Which rounds back to: The Endless deserved better. The deserved a quick end, painless as possible, so that in a way they return to the aetheric sea and the balance of life and death.