It's #2 for me, but for that reason, I always understand when people don't regard it as highly as I do. It is definitely greater than the sum of its parts, with every song written to serve its role in the album as a whole piece, rather than meant to knock your socks off as a standalone track.
And for that reason, I never listen to tracks individually. I rarely have, and can't even remember the last time I did. It's an album that needs to be listened to and appreciated as a whole. That is the double edged sword that is the concept album, I suppose.
I think that's only really the case if you care about the lyrics. But musically, I think the vast majority of SFAM is solid on its own. I mean, obviously there are songs like Regression and Through My Words that serve better as lead ins into the following songs, but pretty much everything else on the album is musically awesome even on its own. And if you break it down into moments, it pretty much has no bad moments, aside from maybe the overindulgent sex/gambling breakdown on Home. But aside from that, every moment of music on the album is sheer pleasure to the ears, and a lot of them hold up extremely well on their own merits. Especially the two ballads.
You're right, but the first half of the album especially is really designed to run together as part of the album, hence why people rank them together and cop my rage.
A lot of people don't count Regression because it's just an intro to the album, and can't separate Overture 1928 from Strange Deja Vu because of the segue between them, and then TMW is basically a short bridge between that and Fatal Tragedy. I can't recall seeing anybody rank Regression or TMW highly, because they're so short and really designed to be part of the album.
The second half of the album holds up well as individual songs, with tracks like BTL, THE, Home, TSCO, and Finally Free, that work perfectly fine standalone, because they have their own start/finish, rather than running on, and have enough "meat" to work separately.
But there are enough of the shorter tracks to kick off the album that I can understand why some people don't like the album as much.