As per option 1, Sound quality will suffer significantly with a cassette adaptor. You will be severely restricted by your cassette player's head - most cassette player units barely offer a freq response of 20 - 16Khz and a poor SNR, while a CD is capable of the full 20 - 20Khz. Basically, even if you have the highest quality audio running through a cassette adapator, your audio will be completely confined within the specs of your cassette player - which needless to say will be poor.
An FM transmitter is only marginally better with the frequency response, but the static and other noises in the background wouldn't constitute a high quality listen.