My point with regards to 2 is that it would have to maintain consistency across translation runs. Entire novels don't fit in the context so it can't make up a logically consistent novel across prompts.
When I do the translations, I actually don't even include previous chapters in the context.
So the last novel I completed is long one, but not unheard of I think it had 6 million characters. Now I don't know how many tokens would that be, but I doubt most models can support that large context.
And really consistent editing and choices between what is translated and what is not and instead is Romanized is rather important with many Chinese novels.
You can get something you can figure out, but I doubt you get something really enjoyed.
When I do the translations, I actually don't even include previous chapters in the context.