For maximum mining performance, is it better to minimize latency from the mining rigs to the p2pool server, or from the p2pool server to the Internet?
Are you aware that there is no 2nd option in your post? :)

Despite that, your second 1. option is better. If connection to the miner is one of the poor quality ones, p2pool will just adjust the share diff accordingly, decreasing the theoretical penalty.

However, if connection from your pool to the Internet is poor, it doesn't matter if you find block or not - it can be orphaned anyway, especially with altcoins with wrong low block time.