Converting the covariance matrix in DYNARE from logs to levels

I would go for option 3. Take your mod-file in log-deviations and define an auxiliary variable
y_level=exp(y)
and work with this. See also Question about understanding irfs in dynare

Sidenote: I do not understand your approach 2. If you want level deviations, you are interested in x_t-x, not \frac{x_t-x}{x}.