[@link23454] this is quite confusing. I prefer something that is easier for new characters or new players to understand and then, join. Lore that gets too deep already, I'm afraid some won't be able to catch up with everything. That's a drawback. However, as you mentioned with the 'Dead' thing, it's quite unfortunate. So, I don't know what to choose. I really hope that the new ones will be able to catch up with everything if it's not too late. 

EDIT: Seeing this, I think option one is the best. You don't lose any characters and the new information is easier to grasp for the newcomers. Both gain advantage.