Third theory is my favorite, and it's what I'm betting will happen. Or at the very least, Ryoshu will kill her daughter, maybe in a "putting her out of her misery" way.
I think regardless of the daughter's status going in the Canto, the worst possible writing decision they could make is keeping her alive and safe by the end. There'd just be no consequences for Ryoshu, unlike even Hong Lu who despite having the most "wholesome" Canto, was still brainwashed from birth, forced to watch a massacre, and had his entire worldview shattered. It'd just make the Canto really mid, even if you fill it to the brim with random edgy or hype moments.
To put it simply: If Ryoshu’s daughter is alive and relatively okay (just traumatized/separated), then her suffering is retrospective. It becomes "Oh no, I was a bad mom for leaving you [or X other reason], but we can fix it now", which is just boring in my opinion