[bobwaycott]

I agree with your second suggestion (although you added an unnecessary that in there), but your first changes the meaning significantly. To my reading, “it isn’t totally impossible” signifies a thing being very to extremely difficult—perhaps close enough to impossible that the difficulty is worth recognizing as potentially insurmountable—though not entirely outside the realm of possibility. “It’s totally possible”, on the other hand, seems to indicate a thing of such negligible difficulty the obstacles are not worth mentioning.