Dividing paper after Reject & Resubmit decision
This is common for very novel, high impact findings, particularly when the issues are complex and have both theory and application. What I’ve seen work is a shorter theoretical work submitted to a high impact journal that touches on application (often, the work references this ‘submitted’ or ‘in preparation’ work). The longer work is then submitted to a lower impact journal, sometimes just because the page limitations are more forgiving.
This of course works best when you can tell two separate but related stories that feel complete on their own. If you and your coauthors feel like such separation is forced, it may weaken rather than strengthen the effort.
I’d say your #1 might be unlikely unless you get buy-in through discussion with the journal. #3 may not do your work justice. I’d lobby for #2 based on the limited information available.
Based on the information you provided, I would definitely and gladly divide the paper into two shorter manuscripts to be submitted at the same time to the same journal. In such fashion as in:
On the application of theory (I): Demonstrating A;
On the application of theory (II): Explaining B.
I think such papers are elegant, easier to read, more attractive, and potentially more organised than a heavier, lengthy treatise going through A into presenting and explaining B.
However make sure the manuscripts are independently readable, so that someone could find paper (II) and find all he seeks whether or not there's also interest in part (I) which probably requires a different background. Organising these serial publications in the proper way depends on considerable skill and chance. You may have hit a good opportunity.
An example of series papers given below:
Re-investigation of venom chemistry of Solenopsis fire ants. I. Identification of novel alkaloids in S. richteri. 10.1016/j.toxicon.2008.12.019
Re-investigation of venom chemistry of Solenopsis fire ants. II. Identification of novel alkaloids in S. invicta. 10.1016/j.toxicon.2009.01.016
(Not exactly the best papers ever, but the format is neat.)