I don’t think anyone follows #2. Nobody views it as Malchus. Do I look at it like Peru? No, because Peru has no kedusha to it. Israel is a holy land, and historically the land of the Jews. Do I believe we have a divine right to have it now? No, that will come with Mashiach. That doesn’t mean we can’t have it now as long as it was done properly, without fighting – which it was, through diplomacy.
As for it being founded on kefirah, true, many of the people who founded it were not frum. So what? The fact is that Torah Judaism is flourishing there in a way it hasn’t probably since the Beis HaMikdash was destroyed. Do you honestly think that if Turkey was running it things would be better? When lands were turned over to Palestinians, with assurances that holy sites would be preserved, look what happened! Nothing was preserved. Kever Yosef was ransacked and destroyed.
The founding is irrelevant. The state was founded, and that won’t change. Look at the positive, not the negative.