Number 1. Number 2 is not a nice place to be, will be impossible to get to look good, is a maintenance nightmare, will have worse performance, might conceivably save some memory but is not worth it.
What you're trying to achieve would be better with a pin than with physics, but it's still not worth it. (Sorry just seen this was your plan)
Just use animations - if you have to optimise (and you may not have to) then do so at the end when you know what has to be achieved by it.