I don't understand your criticism of option 1. As a Facebook user, I can remove anyone I want from my feed either by "unfriending" them or simply unsubscribing from their feed. Ads are not people so Facebook doesn't provide a facility for unsubscribing from them (and I assume they do some kind of curation on them since they generally seem of decent enough quality for internet ads). Of course, I use an ad blocker to ignore them anyway, but that's beside my lack of understanding of your criticism.

To your criticism of option two, I think this is the fundamental flaw in the goal of engineered social systems. There are groups which have radically different ideas about what is "kind". Extreme religious fanatics would say it's unkind to let someone "live in sin", so extreme measures are considered kind for the spiritual well-being of the individual and the community. Secular western thought is more interested in material well-being, so it would say kindness is the promotion of the material well-being of others, generally without passing judgment on how they choose to live (except insofar as it violates others' material well-being).

So the decision of who decides what's kind can lead to completely different interpretations of what kindness is and how the social system behaves.