But also wanted to add another option between 2 and 3 where I feel a more valuable editing could also be done.
2.1: Publicly retract the story, and edit the previous text (with visible or not removals/edits) along with a disclaimer, to improve the content and present a fairness assessment of it's text for new and previous readers.
I've encountered this before, with both visible (highlighted or striked off content) or completely deleted parts with some "erroneous/unverified content deleted" kind of indication, and I really appreciated the transparency an understanding why something was reviewed.
I feel that would be a valuable approach to these kinds of publications.