Resetting offside

Had an interesting call to make in an Open Cup game I did about 10 days ago. It was a highly competitive match where yellow was up 1-0 when the play happened.

Blue is pushing for the equalizer, about 12 minutes before the end of the game. Player heading towards goal, about 10 yards away from the top of the 18, threads a chest high pass to a streaking attacker, ball takes a slight deflection off of the chicken wing arm of a defender and to the attacker who scores. As I am about to validate the tying goal, I see my AR with his flag up for offside.

Tough one here, because you have the offside happening after the deflection, so I had to think, was the deflection really deflection as in "no intention whatsoever" or deflection as in making himself bigger or intentionally played.

The three scenarios here are this:

1. If it is just an innocent deflection, no reset of the offside, so no goal and indirect free kick coming out.
2. If it is a "making yourself bigger" but not intentionally playing the ball, then it is handling but no advantage as offside still would count as it was a deflection in terms of intentionally playing the ball but not for resetting offside. So free kick for the attacking team.
3. Intentionally playing the ball interpretation would mean wave down the AR and say that it is a valid goal as the intentionally played handling would reset the offside, no offside, good goal.

It took me a minute by myself to figure all this out, then I went to the AR and we discussed and decided on #2. What I need to determine from those that know more than I do, is whether #2 is even an option here to select. It was a match critical choice, and I almost wish I was being assessed, because I would have loved an answer to this question on the spot.

Still, when I do get a chance to pose this question to someone who knows more, I will post their reply. Until then, let me know what you think would be the correct interpretation. Thanks!