It really depends on which companies you pick to fly with in option two.
Option 1 will, as you say, almost certainly guarantee you another equal flight should something happen at some stage of your journey which causes you to not make your connection.
Option 2 however is largely dependant on which companies you use to fly your different legs with.
- If you choose to fly Low Cost Carriers (LCCs) then you have no support at all.
- If you fly alliance partners (Oneworld, Star Alliance etc.) for both
legs of your trip, it is highly likely that delays on the first leg
will be supported by the other airline (as is usually the case with
at least British Airways and QANTAS).
- It is also of note that if both legs are flown by different airlines
that have a codeshare agreement, it is often the case that the
codeshare partner will support you should you suffer delays with your
first leg. (There are cases where non-alliance members codeshare flights).
- A further note is that in the case of extreme and extenuating circumstances (such as major natural disasters) some airlines will support you regardless of who your first leg was flown by. [I had automatically reassigned tickets when flying All Nippon Airways (a Star Alliance Partner) coming from a 13 hour delayed QANTAS flight (Oneworld Alliance) the day of the 2011 Tohoku Earthquake and Tsunami in Japan. It didn't cost me anything either].
You also need to remember that in the event that the two different airlines you fly are not either codeshare or Alliance partners, you will need to collect and re-check in your baggage at your stopover point (be aware baggage allowances may also be different between each of the airlines you choose hence you may have to forfeit, send or pay extra for your luggage at your stopover).
You do not need to have a valid visa for entry to a country when you are in a transit situation, however, as you would be re-checking luggage (in option 2), some airports may request you get a transit visa at the minimum as the check-in area is outside of the "sterile" (read: secure) zone (some airports don't require this as you can collect your baggage before the customs check and go to a transit / help counter for the corresponding airline you will be continuing your next leg on).
Also, you need to consider that your flight may not (and in most cases will not) necessarily be delayed at all (but it is always good to consider it being delayed as part of your travel plans).
Further, if you want to fly cheap, consider when the off-peak season is. Going in or around major holidays in either your departing or arriving country is going to push up the price of your ticket by up to 200% of an off season fare (sometimes even more).
COMPARISON
Pros
Option 1 : Baggage will arrive at final destination without you needing to do anything passed the initial check-in. If lost or rerouted, the airline will usually offer some kind of temporary compensation until your baggage arrives (at least if you claim under Australian Consumer Law). If delayed, will be moved to next available flight and/or accommodation / food provided for (if the airline is at fault and the delay is overnight/a considerable number of hours). Can use the lounge of the airline at all ports of call (that a lounge for said airline exists) if you are a member of one of their programs that grants lounge access (or is some instances pay for the privilege as a one off).
Option 2 : (Alliance) - Will in most cases be similar to option 1 excepting the price of the ticket(s) being cheaper, however compensation may not be provided unless your baggage is declared as lost). If delayed, will usually be moved to next available flight with the same airline as your second leg. Can use the lounge of the first airline (until initial departure) if you are a member of one of their programs that grants lounge access (or is some instances pay for the privilege as a one off) and the second airlines lounge at the stopover point (subject to the same conditions of entry).
(Codeshare) - Once again similar to option 1 excepting the price of the ticket(s) being cheaper, however compensation may not be provided unless your baggage is declared as lost). If delayed, will usually be moved to next available flight with the same airline as your second leg (though in some cases the airline of your first leg may offer an alternative). Can use the lounge of the first airline (until initial departure) if you are a member of one of their programs that grants lounge access (or is some instances pay for the privilege as a one off) and the second airlines lounge at the stopover point (subject to the same conditions of entry).
(Unrelated Airlines / Other) A cheaper ticket. Can use the lounge of the first airline (until initial departure) if you are a member of one of their programs that grants lounge access (or is some instances pay for the privilege as a one off) and the second airlines lounge at the stopover point (subject to the same conditions of entry).
(LCC) A "much" cheaper ticket.
Cons
Option 1 : A more expensive ticket.
Option 2 :
(Alliance) Until returned or declared lost, rerouted or temporarily misplaced baggage will not normally have any compensation awarded. Accommodation and/or food for delayed flights will most likely not be provided if you are moved to a new flight. Some airlines will make you pay a (usually) small nominal processing fee to change your flight time.
(Codeshare) As with Alliance, until returned or declared lost, rerouted or temporarily misplaced baggage will not normally have any compensation awarded. Accommodation and/or food for delayed flights will most likely not be provided if you are moved to a new flight. Some airlines will make you pay a (usually) nominal processing fee to change your flight time.
(Unrelated Airlines / Other) A cheaper ticket. until returned or declared lost, rerouted or temporarily misplaced baggage will not normally have any compensation awarded. Accommodation and/or food for delayed flights will most likely not be provided if you are moved to a new flight. Some airlines will make you pay a processing fee to change your flight time.
(LCC) It is an LCC. Expect smaller leg room, having to pay for food and drinks, long toilet lines and stringent baggage weight checks for all of your baggage (and exorbitant fees for any excess). If you miss your flight, the connecting LCC will usually make you buy a whole new ticket. LCC's do not usually have lounges and any delays you may face will usually have no compensation at all awarded. Lost baggage is still subject to the same rules as other bigger airlines concerning baggage loss and as such until returned or declared lost, rerouted or temporarily misplaced baggage will not normally have any compensation awarded.