I have done this kind of thing. It isn't exactly fun.
In my case, I had to butt up to the sides of the existing tiles. This didn't stop me battening however. I wouldn't have done it that way out of choice, but it was how the old bath had been installed - the tiles were not cut to a level and so I had to replace like with like. This was for a friend who accepted it was a like-for-like replacement and who was due to give birth a week or so later so just needed it done quickly and isn't the type to then complain about how it looks so long as it works.
If the original bath had been tiled onto, as it should be, then I would have cut down the panel and fitted the bath to finish 2-3mm under the existing tiles. So my vote is for option 2, but bear in mind cutting a panel is not an easy job.
I have cut down plastic panels to fit under an existing bath. Then the panel had no structure and I have to build an elaborate wooden frame, curve the edges in, use velcro to make the panel removeable etc to support the panel, faff around with a block plane etc and cut carefully around surface pipework... and it took me over a day. The finished result looked excellent, but I made very little money on that at all. As I said to the customer, at least it was interesting to do, even if it did take a whole day just to do the panels, support the bath feet properly etc etc.
This was a part of the cut-down panel job in progress. Today, I would not really be happy with this, as the bath edge is still not supported by the wooden frame, but I was happy at the time.
View attachment 36613