What does %elemental damage get me?
Solution 1:
I take it to mean an increase to the existing damage of that type. In your particular example, it would be option 2.
I've seen armour items with + percentage elemental damage. Because an armour item does not do damage by itself, it would not make sense to limit an increase in elemental damage to the item making that damage.
On the flip side, if you have + percentage elemental damage, and are not actually applying any of that type of damage, then the stat is wasted.