This is a cool idea, although I prefer the map option to be located next to the minimap like shown in pictures in the first post of this thread. The idea of putting a map icon next to friends icon isn't good, because it's the last space left and there's so many other things to implement and add there that are more important. (Like options for managing clans or some other great ideas some people suggested).
I remember exactly the same topic on official RuneScape forums. While it's all quite nice, suggestion 2 has a major flaw: reporting becomes more complicated and because of that it's way harder to send the report within the 60 seconds. While you're busy filling in the report abuse form, a minute will pass and your report will no longer contain any evidence. That's pretty useless to give so much information on the type of abuse while Jagex staff needs to see the evidence anyway. They will see what exactly happened. Why should I be bothered with choosing what type of offensive language they used (even typing it in the "please state" space?!) when it's clear enough without such details? Including this won't help Jagex.