These are all completely obvious — idea 2, though, only in retrospect. For a long while I've wondered about how to combine path editing with hyperlinks. Numerous browser extensions have tried various methods: mode toggling, modifier keys, the direction whence came focus, and so on.

The OP's approach is perfect: always navigate to wherever the caret is placed. I would personally drop the ugly gradients in favour of hyperlink-style underlines, but seriously, thanks for an elegant solution to a simple problem.