Thanks for the feedback! I think the consensus is definitely Option #2, but if anyone has some insight as to the reason why it's the right way to do it, or why it's more aesthetically pleasing, I'd be interested to hear it.
Well, there are many explanations why option 2 is better. Many are based on aesthetic opinion...
With the outside stiles full length, it provides for a solid piece of wood looking at a finished end.
It also gives maximum structure for carrying a hinge.
It allows for more (better) coverage (and strength) for the end of the cabinet to the upper and lower piece (the joint).
It allows for less joint line to show from the side and the front if a door is overlaid.
With whatever method is used for the joinery, with the stiles full length, a M&T, or dowels provide axis strength for the lateral stresses of a hinged door.
If the rails ran through...
If hinges were used, they would be close to the joint line.
The joint between the stile and the rail would be more obvious, in relation to having them vertically at the base and top. IOW, the vertical grain appearance from the front would be interrupted by the rails.
And for other non specific, unexplainable reasons, hot air rises, and crime doesn't pay (so they say). And who are they?
The sky is blue, or so they say...
But what is blue and who are they?