Go with Option B.
Doing so, will give you a breathing moment to make sufficient changes in your profile and go with the process at ease.
In response to your other questions,
- Your spouse's passport is compulsory in proceeding with application.
- Yes, you will eligible for the next when you decline invitation.
- Your e-medical have the validity of one year. you still have to furnish new report upon next invitation(safer path).
- Yes, you can do as many changes as you can, until you receive ITA.
- You can never guess right which visa office will process your application. Based on the application load, it will be transferred to the LVO else it can be processed via CPC-Ottawa or Sydney.
Hope it helps