You don't state what your requirements for travel are. If you travel for work, that leads down one path, travel strictly for leisure another.
In general, except for certain stay-based promotions, switching hotels nightly doesn't do anything except give you a workout moving your luggage around. IC hotels may be an exception to this, although that is changing.
I don't see much difference between your #2 and #3 other than the rate you might buy. I personally have only used the cash and points approach once and it was something of a toss-up for me, as to whether I would just pay cash or not when I ran out of points.
I travel extensively for work, and take advantage of whatever promotions I can and it has served me well - generally I do not pay for hotel nights when I go on vacations.
Your mileage may vary depending on employer travel requirements, your taste in and tolerance of various brands of hotels and whether you foot the bill for your paid travel or not.
The scenario I'm looking at is a mixture of business trips and leisure, with the total number of nights at less than 30 per year.
And this discussion is restricted to IHG PC, hence the location of this thread.