There is not an if anywhere in that verse. Let's look at this part...and my holy name, shall the house of Israel no more defile.
With that in mind, let's look at another passage.
Ezekiel 37:23 Neither shall they defile themselves any more with their idols, nor with their detestable things, nor with any of their transgressions: but I will save them out of all their dwellingplaces, wherein they have sinned, and will cleanse them: so shall they be my people, and I will be their God.
Read this verse in context. There are no conditions surrounding the fact that neither shall they defile themselves any more with their idols, nor with their detestable things, nor with any of their transgressions. Ezekiel 37:23 states that God Himself will cleanse them. So why would the sense be any different in Ezekiel 43:7?
Ezekiel 39:7 So will I make my holy name known in the midst of my people Israel; and I will not let them pollute my holy name any more: and the heathen shall know that I am the LORD, the Holy One in Israel.
Notice that it is God that will not let them, meaning His people Israel, pollute His holy name any more.
So this would be why I no longer support #1. So which view do I now support? You got me? I'm still not certain what to make of these 8 chapters. Does anyone?