Your number two is correct. Telling someone that clothes is a direct sign of how someone will act or treat someone else is "judging a book by it's cover". It's rather ironic that adults instill these lessons in their children, then pass a double standard when they act on them.
However, young adults and children should be able to empathise with how they are going to look to the current generation of parents. Parents today are afraid of anything different and they, despite what they tell others, are extremely hypocritical to what they teach. They'll tell you to not judge a book by it's covers, however immediately relate someone who wears a jumpsuit to what they saw on MTV the other day. As unfair and irresponsible with their lessons as parents are today, it's best just to let them think they are winning the battle, but be yourself with your girlfriend as it's obviously what she was drawn to in the first place, right?
Taking that into consideration, just wear some nice clothes, act polite, and try to respect the parents opinion. (Don't give up on your own integrity though). I've had more than one argument with my girlfriends mom, her dad seems to be fine with me, about how serious I was with her daughter. "We think you're trying to marry her or something." I replied: "Yes, ma'am. I am. Not today, not tomorrow, maybe not for another five years, but I have every intention of sliding a ring on her finger one day, if we make it that far." And who knows? Maybe she doesn't think about me that way, but it's how I feel about her and she knows it and I want her to know it. So at least I won't be blaming myself if things don't work out.
Edit! I also agree with your number one. Been through that before as well. Parents need to understand, if your child -wants- to do something, no matter what you do as their parents, they -can- and -will- do it if they really want to. Being oppressive simply will lead them to doing it as an act of rebellion, then when they are stuck in a state of contrition because they can't talk to their overbearing parents, what are they going to do? Exactly: Whatever they have to do, without your help.