What about redundancy if distributor goes down? I'm setting up load balancing, transactional replication and mirroring. However, what I actually thought might work from the beginning, making the system redudant doesn't actually work because a Publisher can't have multiple distributors.

Preferable:

This is what was intended to do from the beginning:



Option2:

This is what we have to go with and my concern is that the weak spot is if remote Distributor server goes down it will stop syncing out the latest data. How can I make the distributor redundant?
There is no support for Distribution failover in MSSQL replication. 

One solution to this limitation is to use Windows clustering on the Distribution database. See more about clustering here: http://sqlmag.com/sql-server-2008/planning-and-implementing-sql-server-cluster http://sqlmag.com/sql-server-2008/set-sql-server-2008-cluster http://sqlmag.com/sql-server-2008/upgrading-sql-server-2005-cluster-sql-server-2008