What is the best way to pass a stream around

You may not realize it, but you are attempting to implement the pipeline design pattern. As a starting point, consider taking a look at:

• MSDN: Pipelines
• Steve's Blog: Pipeline Design Pattern
• (other good references??)

With regards to your implementation, I recommend that you go with option #2:

public interface IStreamHandler
{
    void Process(Stream stream);
}

With regards to object lifetime, it is my belief that:

• the implementation should be consistent in how it handles calling Dispose
• your solution will be more flexible if IStreamHandler did not call Dispose (now you can chain handlers together much like you would in Unix pipes)

THIRD-PARTY SOLUTIONS

Building a pipeline solution can be fun, but it is also worth noting that there are existing products on the market:

• Yahoo: Pipes
• Microsoft: BizTalk
• IBM: Cast Iron
• StackOverflow: Alternatives to Yahoo Pipes

ADDITIONAL NOTES

There is a design issue related to your proposed Option 2:

void Process(Stream stream);

In Unix Pipes you can chain a number of applications together by taking the output of one program and make it the input of another. If you were to build a similar solution using Option 2, you will run into problems if you are using multiple handlers and your data Stream is forward only (i.e. stream.CanSeek=False).

Option 2_2 is the standard way of dealing with disposable resources.

Your SomeTestClass instance asks the producer for a stream - then SomeTestClass owns a stream and is responsible for cleaning up.

Options 3 and 2_1 rely on a different object to clean up the resource owned by SomeTestClass - this expectation might not be met.

Option 1 is jut copying a stream's content to another stream - I don't see any benefits in doing that.