Of the two choices, I’d tend to subscribe more to the first one than the second one. I believe that God loves us no matter what we do. In His justice, He sometimes has to punish us for our sins in order to teach us how to live more holy lives, but I think that punishment stems from love rather than from hatred. We are God’s creation, and He loves us more than any of us could possibly imagine.
I believe that the redemption God is willing to extend us all shows how He loves the sinner and hates the sin, rather than hating the sinner because of sin. After all, if He hated the sinner, He would not forgive the sinner. However, since He loves the sinner and hates the sin, He is willing to forgive sinners as long as those sinners are willing to go to the effort of trying to avoid sin in the future.
As for the Psalm quotation that states that God hates all workers of iniquity, which is everyone, I am interested in how one can reconcile the image of a God who hates everybody with the one who “so loved the world that He gave His only Son that whoever believes in Him should not perish but have eternal life.” (John 3:16). To me, the fact that God the Father extended redemption to us in the form of Jesus Christ tells us how much love He bears for us sinners. As far as I can see, redemption and salvation are possible only because of the love and not the hatred that God harbors for us sinners despite our sinfulness. After all, Christ Himself said that He didn’t come into the world for the righteous, but for the sinners, since it is the sick, not the healthy, who need a doctor. (Mark 2:17).