For the benefit of the forum readers, here is my response to this same question you asked elsewhere:
Option 1 (in both cases) is the typical mechanism used. An alternative with an EAR is to place the library JARs into a lib directory in the EAR. But that usually depends on the JARs - if the JARs are for a UI framework (such a Struts 2), then in the WAR file would be a better location; but if they are utility JARs (such as one of Apache's commons libraries) then the EAR file might be best. JDBC driver JAR files, on the other hand, should go in the common/lib or server/xxx/lib directory.
There are no general guidelines as to WAR or EAR file size. I have seen some huge ones, especially for Grails apps!