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I would choose Option 1. If you choose option 2 you are using 66,000 miles to save about $1,100. That's about $0.017 per mile. (Why 66,000? You are redeeming only 55,000 but you are also forgoing the opportunity to earn 11,000 Dividend Miles.)
The ticket that the tour operator buys for you may not be eligible to earn miles. It will depend on the fare code, and you should investigate how many miles the fare would earn if credited to LAN's program versus another OneWorld program such as American Airlines AAdvantage.
I would choose option # 2. By redeeming 55K miles or 66K miles per your math he would be getting a value of 1600/65K = ~2.5 cpm which is not bad at all for economy tics. Higher cpms are only possible for C or J travel IMO.