Skink Chief Stegadon War Spear 340 Scar Vet Cold One Lt Armor BSB BBOC Shield 158 Skink Priest Lvl 2 Diadem Scroll 150 10 Skirmishers 70 10 Skirmishers 70 10 Skirmishers 70 18 Saurus Spears 216 5 CoC Mus 185 3 Terr 90 2 Sala 150 Total 1499 Option: Exchange the Lvl 2 on the Priest for CoC SB, Saurus SB and Mus, and a couple of extra skink handlers
Not being a fan of heavy hero lists, I would probably take out one of your hero’s, most likely the Scar Vet since the Chef on steg makes an awesome hammer, and use the points to flesh out into some bigger units. Of the options you presented, Go for option 2, since lvl 2 on the priest doesn’t do much for magic defense as you’ll have 5 DD either way. With only 1 caster, your own spellslinging will be medium at best and completely nullified at worst.