In Pathfinder ACG, what happens if I must encounter the Villain because of another effect?
I wasn't able to find an official answer, but here's an answer on behalf of the BGG community answers here:

It seems that my latter intuition was probably correct. When you reveal the next card, all the effects trigger, including if it was a villain.

Therefore, in this case, option 1 is correct. I should attempt to temporarily close locations and then attempt to defeat the villain, just as if the villain were encountered in normal play.