I am not sure about the answers to all your questions, but as for Solution 1, I agree that CSS isn't the right solution. CSS is just styling the underlying code, so wouldn't be able to edit the structure.
I was wondering if you'd considered using the Markdown view with this plugin Plugin: Rich Markdown? Near the end of that thread we discuss adjusting CSS to make it look more like the WYSIWYG editor.
Not to discourage you on your path, just wanted to give you an option if you wanted something right away. I use multiple lines in my notes all the time, so I can see how that would be a frustration.