I think #1 or #2 are probably good ways forward (but I don't exactly have experience in this area). I think putting video ads in something that's meant to play Youtube with it's own ads (or not, if you paid to remove them from Youtube) is likely to run afoul of some odd clause in how Youtube is allowed to be embedded. If they are image ads, it's garish and uses valuable screen space, so people won't like it,
The real question is whether you have interesting enough features to support a Pro version that aren't trivial enough to implement that someone will come by and offer the same thing for free. If the original app was $500 and is technically as simple as it seems, I wouldn't rely on it being hard to create a competitor to keep people from offering a free version that has all the features of your paid version. That is, unless you can secure a contract with some paid service that you can integrate with that others can't. Contracts are probably the best way to raise the bar for competitors, especially if you can secure an exclusive contract in some manner. I'm not sure what this would be, so it may not be feasible.
In the end, I personally would probably go with a Donate or Patreon link (Patreon if you want to create more cool stuff (maybe for for free) and see if people will subsidize your projects. The alternative is to either get pressured from free offerings because your solution isn't hard enough to keep them away, or from paid competitors because the market warrants it, or maybe you sit right between them and it's hard enough that a free offering isn't as good or available, but it's too much pain for too little money for a competitor to compete. If you hit that sweet spot, it's probably easy money, but it might not be a lot of money (otherwise the competitors would still be trying).