#2 depends on a number of factors. Could be better or worse, I don't see that as a validation of anything.
The approach that pb4uski described is the right way to go about it, though even that isn't perfect. If you do a 30 year run with a 30 year mortgage, you never see the drop in spending. Plus you might bot have been able to get your current mortgage rate at each starting year in FIRECalc history, so I'm not sure that's totally valid.
I kinda go with a general outlook - say you have 10 years left on the mortgage, are the returns on your AA higher than your interest rate for most 10 year periods in history? I'd measure your 'risk tolerance' against that.
In general, pay-off or not, if you have a decent rate and a decent sized mortgage, is unlikely to make a big difference either way.
-ERD50