I am of the persuasion of number 2.

I believe that grace is shown to the reprobate, but not by the Cross. I think that it is more accurate to say that the cross bought mercy for the elect, not necessarily grace, I may be incorrect here though. I make a distinction between mercy and grace which is expounded upon by A.W. Pink in "The Attributes of God", which I have conveineintly misplaced. If anyone has a copy and knows what I am talking about, maybe they can shed some light there.

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Andrew DeShazo, Deacon, Associate Reformed Presbyterian Church, Memphis, TN
"All of us stumble in many ways, but if anyone is never at fault in what he says, then he is mature, able to control his whole body."(James 3:2)