Ok, There is a problem with your first idea, that the space craft is traveling at C. It just can't do that. And if it could I don't think that the math would work. The space ship would wind up with an infinite (relative) mass. There is a form of math that works with infinities, but it isn't the type you use with Special Relativity (SR). SR uses just plain algebra.

Bill Gill

C is not the speed of light in a vacuum.
C is the universal speed limit.