I voted for the second, or regional option.
IOTL, the English Kings and English establishment adopted a version of Protestantism as the government supported branch of Christianity. So did, separately, the Scandinavian monarchs ,much of the German nobility, and the Teutonic knights. These versions were the Anglican version in England and the German versions in Scandinavia that retained bishops and other Catholic practices. The elites in Scotland and the Netherlands revolted and adopted a more radical version, centered around the writings of John Calvin.
England eventually became a powerful nation, by far the most powerful Protestant nation, and this led to Protestantism being spread around the world. Without the adherence of the English elite, versions of Protestantism became the established church in countries weaker than England. It had also spread throughout Europe as a minority or underground movement, centered on Calvins writings.
Also IOTL, the long promised and long delayed Church Council finally got off the ground as the Council of Trent, and produced a revised and reformed Catholicism. Pre-reformation Catholicism was somewhat different (for example, it was less centralized and there was no provision for anonymous confession). And later, in the seventeenth century, Catholicism developed its own Calvinist current in the form of Jansenism.
So ITTL, Protestantism without the support of the English establishment becomes much less influential and important. Once they have established their own national churches, there is no reason for the Scandinavians to recuse into the main Catholic fold. There could well be some recusal among the nobles within Germany.
There are two big questions, which are what happens to Calvinism and the reformed variety of Protestantism, and what happens to the Council of Trent and the Counter-Reformation. These questions are linked, due to the Counter-Reformation being to a large extent a response to Calvinism. There might not even be a Council of Trent ITTL.
Calvinism could wind up being folded back within the Catholic fold as Jansenism ITTL. It might be crushed to some degree. It also might become the default religion of middle-class Christians everywhere, with the high nobility in all countries retaining allegiance to the Catholic hierarchy (except for Lutheran and Orthodox countries). And how this developes butterflies into a different Enlightenment.