The second conclusion looks to be the most likely one. I'll also add that Charlie's approach to rehabilitating sinners leads to Heaven starting the Apocalypse. Only this time, Hell doesn't lose (as Al Pacino said in
The Devil's Advocate, "But consider the source, son.") in a battle scene just like
Avengers: Endgame and maybe the Helluva cast will be included.
Echoing
@Chilson, the worldbuilding has gotten so convoluted that this "Hellaverse" looks like it will run into the same problems the MCU is now having with a shared universe. If the
wiki is to be a reliable source then the Hazbin Hotel and the I.M.P building reside in the top-most level of Hell, the Pride Ring, and sinners are confined there. Yet
Helluva Boss has currently not acknowledged the annual culling or that demons born in Hell, like Imps or Hellhounds, could also be at risk. Also, how is the political system in Hell laid out? Demons such as Alastor and Sir Pentious fight for control of Pentagram City yet Lucifer is Hell's king and Charlie is his sole heir. So do the royals like Lucifer, Charlie, and Stolas have no real power (like the current monarchies of England and Japan) and are just stand-ins for the elite that are either snobbish to the lower demon class (as seen with Stolas in "The Harvest Moon Festival) or show downright contempt (Paimon and Stella)? Another big question who's next in line after Charlie? Is Paimon or another demon royal that hasn't debuted? Octavia was revealed to be "precautionary heir", which possibly means Stolas was not Paimon's firstborn offspring. I know, I know, I am overanalyzing a series that is animated dark comedy musical about the residents of Hell.