I would like to see an option 4:
Option 4: The server side of sync is open sourced, and I can run it on my own machine, and point my browsers at my personal instance. Then no data is ever on Mozilla's servers.
This still uses FxA for authentication. You can self-host that up as well, but it's not nearly as straightforward, and I'm not aware of good documentation on how to do so.
I have not set it up yet. But is this not what you are looking for ?
https://mozilla-services.readthedocs.io/en/latest/howtos/run...
The harder aspect comes with the Firefox accounts server, as that requires a bit more configuration and deployment.
I would be very interested in seeing someone build a docker-composer setup for this, such that it can be automatically deployed for those who don't have the time/skills to set it up.