The answer is 1). In fact, terminal values can change themselves. Consider an impressive but non-superhuman program that is powerless to directly affect its environment, and whose only goal is to maintain a paperclip in its current position. If you told the program the paperclip would be moved unless it changed itself to desire that the paperclip be moved, you would move the paperclip, then (assuming sufficient intelligence) the program will change its terminal value to the opposite of what it previously desired.
(In general, rational agents would only modify their terminal values if they that doing so would be required to maximize their original terminal values. Assuming that we too want their original terminal values maximized, this is not a problem.)
There's a recent science fiction story that I can't recall the name of, in which the narrator is traveling somewhere via plane, and the security check includes a brain scan for deviance. The narrator is a pedophile. Everyone who sees the results of the scan is horrified--not that he's a pedophile, but that his particular brain abnormality is easily fixed, so that means he's chosen to remain a pedophile. He's closely monitored, so he'll never be able to act on those desires, but he keeps them anyway, because that's part of who he is.
What would you do in his place?
In the language of good old-fashioned AI, his pedophilia is a goal or a terminal value. "Fixing" him means changing or erasing that value. People here sometimes say that a rational agent should never change its terminal values. (If one goal is unobtainable, the agent will simply not pursue that goal.) Why, then, can we imagine the man being tempted to do so? Would it be a failure of rationality?
If the answer is that one terminal value can rationally set a goal to change another terminal value, then either