your first argument.

so-called "law of recapitulation" notes the similarity between the embryos across different species, but has long ceased to be thought of a "faithful" recapitulation of evolution. this was actually in my high school textbook. you might want to read some.

the embryos actually do share a number of similarities, as such I doubt Haeckel was lying knowingly, given the limits of science in his day. their irreconcilable differences have long since been noted.