[buster73]

In the end it comes down to personal preferences and budget, but for a street car I would also tend to your “Option 1” with some slightly stiffer shock inserts and probably Turbo tie rod ends.

I was running my 73T with stock T-struts and red Koni Classic inserts for many years. Slightly lowered and combined with stock torsion bars, S-sway bars, PU-bushings and 930/Turbo tie rods handling was great for a street car and still good enough for an occasional AutoX or track day. Driven too many cars that were far too low and stiff and no fun at all on a bumpy road or in the rain. Of course wheel/tire combination will also have a major impact on the overall performance, but you can have plenty of fun with basic 185/70 on 15” wheels. Anyway probably a good idea to roll the fender lips while you are doing the bodywork to give you more options later.

Brakes are a major limitation with the 3“ T-struts, but the M-calipers certainly are good enough for street driving. Was running BMW calipers for a while, that fit the T-struts and offer the larger pad size, but these BMW parts have also become quite rare and expensive these days.

Only after switching to a 3.0 engine it was time for a major suspension and brake upgrade. Was lucky to source a set of reasonably priced green Bilstein B6 struts (Turbo stock rating) and matching rear shocks. The “Turbo stock” setting is slightly stiffer than original but far from the other available sport options (Sport Street, Club Sport, 1000 Lakes). IMO also a good compromise for light early cars with lightweight wheel/tire combinations. Also allowed me to upgrade to A-calipers.

Many choices out there and it is easy to go overboard and open a can of worms. Have fun with your project !