Great scholars are on both sides. Prof. Sahib Singh, Shabdaarth scholars, Bhai Vir Singh support number 1 Paath and Giani Harbans Singh, Bhai Kahn Singh Nabha, Pandit Tara Singh Narotam support number 2 Paath.
The problem with #2 Paath is that ਭੁਜੰਬ is not a valid word for arms and what's the need to interpret it this way when ਭੁਜੰ alone can be interpreted as arms. Another problem is that if we do the Paath ਭੁਜੰਬ ਲਇਓ, then from where would we derive the meaning of power or Bal?
The meaning is very clear - The whole Janam has been gone doing "meri meri". The ocean of power of arms has dried i.e. power of the body has gone. ਬਾਹਵਾਂ ਦਾ ਬਲ ਰੂਪੀ ਸਮੁੰਦਰ ਸੁੱਕ ਗਿਆ ਹੈ।
Kulbir Singh
ਸਤਿਗੁਰਬਚਨਕਮਾਵਣੇਸਚਾਏਹੁਵੀਚਾਰੁ॥