I'll likely be using the first option as long as I can. I don't trust Windows 10, much less Microsoft in general these days, and I'm not interested in DirectX 12, so switching to the new OS is a waste of time.
Security concerns I understand though, so on that front, Microsoft has the upper hand. Still, nothing a LAN cable being unplugged can't fix, at least for a while.
Yeah, I think many people will be doing that. Which means their machines will either be disconnected from the internet or be big security hazards. I'm not sure there's anything MS can do to get people to switch, unless they do something punitive to existing Windows 7 users in the final update, which would look horrible and not be all that helpful in the end.
Yeah, forcing users to switch by a method like that would not go well, especially PR-wise. Case in point: Epic Games. But since I still see machines running on Windows NT and ME, I doubt they'll make such a drastic move.
If anything they'll make the new OS less appealing by the decisions they make.