The thing is that the 'Type' field solution is a workaround to start with. It shouldn't have been necessary if Microsoft decided to support some more formats.
Regarding your solutions:
1)Not possible. Word generates the xml code internally. It follows the guidelines of bibform.xml but it doens't allow you to change the content of a field.
2)You could do that. You could add a preprocess step which converts the value of the type field to all lower case and then use that. In case of citations and footnote citations, you could probably do that during the defintion of extendedSource:
<!-- Copy everything except the Type field. -->
<!-- Add the type field in lower or upper case. -->
<!-- Do the rest of extending the source. -->
In case of a bibliography, you could do that during the generation of the sort key.
3)This is possible. All you have to do is extend bibform.xml to incorporate your own type. The thing is, if you follow this road, you will be generating xml which no longer complies to the xml schema for bibliographies. As Word doesn't check the schemas
when generating documents (which is a serious flaw if you ask me) this isn't a problem in Word. However, you have no idea how other programs will handle your document. If they follow the strict schema definition, they might throw some kind of exception. It
is highely unlikely, but it is possible.