This "third" option is really just the 2nd option.
While I sympathize with your sentiment, wouldn't that mean that free speech societies exist nowhere on earth? I would imagine every jurisdiction at least has a "fire in a crowded theater" clause. In which case, arguing one toe over the line disqualifies it as free speech means that free speech itself doesn't exist as a concept.
It's the same problem as "no true communism has ever existed." Maybe technically true, but just makes conversation more difficult.
If there's one thing I would really like to believe in, it's radically free speech. But as I get older, I have a harder and harder time finding things that I can label with absolutes.