I don't agree with #3 at all, and I take a realistic approach on this. No coach goes into a job trying to lose as you would claim - they would be out of a job very quickly.
I think the truth lies somewhere between #1 and #2. Yes, he had bad luck early on - but you can't use 4 years worth of bad luck as a legitimate excuse. And you can't say he's a terrible coach and/or a program killer because he won at UNI and by all appearances he looks like he's going to win at Creighton.
The best explanation to me is this is a guy that was clueless when it comes to coaching at the power conference level. His biggest deficiency being not having any idea what kind of talent it takes to win in the Big 12. I think he overestimated the strength of the MVC and underestimated the strength of the Big 12. He thought, "hey, I got away with not having the world's greatest talent at UNI, and I was successful there. I don't need the best talent at ISU - my system will make up for any talent deficiencies." And why not? Wisconsin, who plays a "similar" system to how McDermott wanted to implement, is very successful without the greatest talent. The problem was most of the talent McDermott recruited to ISU wasn't even good enough to beat decent MVC teams, much less talent that could compete in the Big 12, and when he did recruit talent it wasn't compatible with the system he wanted to run.
On the surface what I said sounds an awful lot like what is being said in #3, but it's not - being clueless as to how to win at a certain level is not the same as coaching to intentionally lose, which is what #3 suggests.