Equipment failure is pretty low on list.
That said, there are a ton of tools available now that give massively enhanced situational awareness to keep pilots from making mistakes. Cooking a cylinder on takeoff should not happen anymore with fully instrumented EGT/CHT displays and alarms. And indeed, powerplant failures are way down despite flying the same powerplants.
But for some reason engine monitors cost thousands [https://sarasotaavionics.com/search?q=engine+monitor]. Many of the dwindling numbers of A&Ps don't know how (and so decline) to install them, and only authorized inspectors (a fraction of licensed mechanics) are allowed to sign off on an installation to make it legal. And when they do, they're told their license is on the line if a mistake is found.
So when a pilot burns or sticks a valve, has to navigate a partial power situation, and in a moment of extreme stress makes an error in emergency landing, was this a technical problem? A regulatory one? A monopolistic economic problem? Or just blind pilot error?
You can fly something smaller and more inline with your budget
You can share the plane with partners
You can get a motorcycle or boat instead.
...I do not disagree that your presented "option 3" is a common one. That hurts me as both an instructor and a mechanic.