Anything more than 3 hours is charged as a full day, so you should always book in 24 hour blocks. That way you have flexibility if your plans change. There's no need to change the reservation to return early.

Option 1 is the easiest and cheapest. There is no penalty for returning early and after-hours return is available (as it is at almost every location). Hertz DEN opens at 5:00 AM and there will probably already be staff there getting ready for the day. The only catch is the shuttle; if it's not yet running, you could take an Uber, and it would still be cheaper than the hotel plan you mentioned.