The first way is correct.
There is a slight ambiguity because we are not told the polarity of the cell. If we work out E° for a cell where the concentrations are 1M, we take the half-cell E°s and subtract the less positive from the more positive, so that E°cell is positive. Maintaining the convention, in the case of hypothesis 2 the concentrations are so changed that the polarity is reversed, and Ecell would be -0.8V. But somebody just measuring the voltage might say it was 0.8V, without specifying the polarity.
But you can tell that hypothesis 2 is physically unrealistic. To produce a change of ±1.9V just by changing the concentrations requires a huge concentration change. Think about it. If you have, say, 1L of a solution 10-64 M in Cu2+, how many copper atoms would it contain?