Wholeheartedly agree with #1. I'm fond of saying, "If it takes longer than four hours, you probably haven't broken it down enough. Find the monsters hiding inside your big tasks."
But you are right that estimates are for managers. Managers should watch their reporter's progress and use that as evidence to build evidence. If the first task of 20 took 1 week, it's a 2year project. Update estimate as time and progress and work remaining increases.