My opinions on your two routes aren't quite as clear as "Go for number 2", so I'll go into a little more detail.
Route 1 is fraught with difficulties. To create something of equivalent scope to this commercial game, as a bunch of amateurs for free, will be a very difficult undertaking. Especially if you haven't released a game already.
I'm not sure if the game is abandonware now. If the copyright holders notice the remake, they'll almost certainly tell you to stop. And really, that is completely their right, by both the letter and the spirit of the law. Particularly English translations of Japanese VNs are such a small market that piracy really does damage them, and even great companies like Hirameki go out of business. The market just isn't big enough for a company to let a free version of one of their products go free.
So option 1 is a bit damned-if-you-do, damned-if-you-don't. If your remake isn't up to the very high standards set by the original, then a lot of people will be unhappy with you, and look down on your effort. If somehow you do manage to meet or exceed the original's level, then you have the threat of legal action by the original holders always hanging over you.
Route 2 has a different set of challenges. You're completely free from expectations, and indeed free from the constraints of the original game. (Even those of us who loved the game could probably find
something that we'd like to change about it.) Plus you're also free to scale down the scope a bit... if 10 girls is too many to write, then you can write a similar game but with just 3 or 5 girls. You can have the game be clearly "inspired by" True Love, in the same way as Shoujo Attack and Flea Circus are "inspired by" Lemmings. But you could get in trouble if the character designs are blatantly copied from their originals, and you probably shouldn't use the precise same names, even if everything else is the same.
So overall, I think Route 1 could - conceivably - produce something wonderful. But there's a very large chance of failure in such a large undertaking, and even if you did succeed, there'd be problems. Route 2 seems a more sensible choice, and those of us who care about copyright will be able to cheer you along with a clearer conscience if you take Route 2.
Whichever route you take, I wish you success and fun, creating and releasing a great game in the fine dating-sim tradition