2 is the only possible one of those options.

You could also make the current setup more reliable by adding a UPS and/or second storage node for redundancy, so that when one goes down, the other is still available. Presumably TrueNAS supports this.

But nothing is going to help you recover if the iSCSI link is broken. It’s up to the host and guest OS to re-establish the link, and to the guest it usually looks like the hard drive has been unplugged, and I don’t know any OS that considers that a supported and recoverable condition.