Since your architecture is going to be thin-client, it won't matter (
too much) how much data you're grinding through. The only thing that will be sent back to the client will be screen shots (WinFrame) or HTML/XML (Browser). Neither will spin through record sets. I would go with something like Option 2 if I were designing it. The thing to work toward is
stateless behavior.
It's great to hear that you're getting into VFP! You should really get hold of Rick Strahl's book about internet apps with VFP. I think it will answer a lot of the questions you have.
Good luck!
Marty Smith
Marty Smith, CSQE