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I'd pick #1. Once he has sent full payment (of the initial agreed upon price, not discounted slightly, like you were thinking the other day), send him the shit he needs. He can't do anything with it until he gets it anyway.
And keep an eye on him to make sure he doesn't do anything with it until you have received payment in full. If he does try to use it before sending payment then follow up with options 3 & 4.
In my opinion, if you get "sue happy" it will scare away a lot of potential customers. Just speaking as a neutral 3rd party.
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