If the PC's start out surrounded by PO'd weres, the their only options will be fight-or-flight, barring some power ful magic on their part that can cool things down, so...yeah, options 1 or 2.
Can't make more comment without knowing the makeup of the party--here's hoping there's at least ONE wizard/sorcerer present, or things will go wahuni-shaped.
Eh, it's Fate. Losing a fight doesn't mean death, if anything getting your ass handed to you makes for a more interesting story. My group consists of 6 players, including two casters with handicapped casting (7 refreshed, one opted for channeling, one opted to craft a few combat items but has no other combat casting) A werewolf with toughness and recovery, a were-leopard with speed, a lawyer with toughness, and a seer with no real combat potential. That said, part of me hopes things go pair shaped, but it's open for the players to get out of this.
Other than that, why not let the chips fall where they may? You can always use GM fiat to bail the group out or get them back on the rails if you need to move the story forward.
Actually? I'm trying to get off the rails completely. And keep off of them. I want them to decide the rails and I'll build the tracks in front of them a bit in the future, although I may have to figure out how to balance this out in the future.
Also, Morrigan is a type of fae in your story? I mean, I like the idea of Morrigan not being a single being (as she was a triad-goddess or three goddesses depending) but The Morrigan being a whole breed of Fae? I'd be curious to hear more about your interpretation of The Morrigan in your game!
Eh, they seemed like a good candidate for wild-fae- I could easily play them out to be too chaotic to fight into either court. In this case, I was going with a redcap-ish heirarchy: their are plenty of harpy style Fae, but the Morrigan are the top dogs. I'm going to have this incarnation to be the strongest since the originals - who haven't been seen for more than 300 years. Gives me lots of interesting ways for the story to play out. The sisters could succeed and become a new Triad, giving the players a long term new threat. They could fail, leaving only one Morrigan with a broken heart love story. We could get into what happened with the original Triad - are they alive? If so, would they confront these new upstarts? Are they dead? How? Why? I chose to leave them in Shroedingers limbo until later so I can figure out how best to make it interesting.
My main concern at this point is victory conditions. I don't know what needs to be done to successfully complete the story, and it makes me nervous. I'm hoping the players decide on a satisfactory ending of their own and I'll just fly with it, leaving tons of loose threads for later stories. We'll see.