This seems to be a way to do number 1 (Caveat - I don't know MySQL that well, so there is in all probablility a different/better way to do this).
My preference would be to do this programatically round some sort of hashing standard (such as MD5). This way your application is database indenendent, and it allows other applications that can implement a digest using this standard a route to validate passwords based on the database values. Have a look at the classes available to you in the
java.security package.