"Germany is/are in the NATO alliance." clarification please

Solution 1:

"Germany are through to the final match on Sunday."

Your assumption A) is correct: 'are' means the Germany being referred to is the German team, ie:

The players on the German team are through to the World Cup Final

For this reason, your sentence (3) is incorrect - Germany the state (and therefore singular) is in NATO.

Solution 2:

"Germany are" rings like sandpaper to my ears. The subject "Germany" is a singular entity even though it encompasses plural entities such as "German team players" or "Germans." The latter represents a great number of citizens of Germany that are not relevant to the sentence such as "German fire fighters" or other citizens that may not be aware of the competition. So, the use of "are" is extremely loose and maybe acceptable only as a style choice.