Well, I'm of no practical help 'cause I've never done it.
Examples from the real world: Approach one --- phpBB. It's a whole freakin' lot of PHP, and nothing is echo'ed as a raw string; all the strings are part of a big array, $lang. (Quid pro quo, they may have changed the way they do things, but that's how it was last I checked). Certainly you must be a hacker to figure out what the heck is going on.
Approach two --- FreeBSD.org. Every bit of that site is marked up in SGML, all $n languages (and there are many) and rebuilt every night by a tremendous set of sh/awk/sek/PERL scripts, HTMLTidy, docproj/jadeTex and more. So it takes masterminds to oversee the process, but most anyone can actually contribute to the documentation.
Now, to figure out whether I've actually said anything different that what you said in the first place ...
I'm not sure how I'd do it, it really depends on the nature of the project, and probably both of these examples won't have the same characteristics as your project.
Probably your decision should be based on maintainability, if that's the sort of site it is. Otherwise, I can't see how it would matter much, except it might actually be easier to take #1 if it's a solo project.
But I've been wrong before, nearly most every day. There are some geniuses here who have practical experience, I'm sure. We'll see what they have to say, I hope.