imo there would be no counter charge and the defender would have to halt in position as per p33 of the rules "if a charge successfully contacts a flank or rear the unit contacted will immediately turn to face the attackers, unless also contacted on another face". Reading this literally sug...

PS my response above is in respect to fire at assaulting units only.

I have tended to play that the outcome as your no. 2 above except that: As you say cav and wavering which fail retire to 3MU. Infantry also. This is because the 'CMT to advance' in the table I believe should be read 'CMT to Contact'. ie if the CMT is passed (spending a CP) the charging unit ends in ...