So, which type of library will you use?
Based on my experience, if you used it for native web applications (fancy user interface, using background picture to attract customer): use solution type 1, but if you want to build data intensive web based applications, you can use solution type 2.
I’ll give you real case. For ecommerce application, you can use solustion type 1 (prototype, mootools, jquery etc) and combine with your existing web to get new user experience. If you see at www.armaniexchange.com and view the product details, you’ll see the web pages using jquery to create new user experiences like: zoom effects, popup image and image gallery. In this case, they still need html page and css which have more flexible and fancy design to attract customer.
You migth use solution type 2 like Extjs to support your backend applications. The user interface of Extjs is monotone (if you compare it to html+css web page), but this type of library is suitable for data intensive applications. You can create a record of a product catalog just like you create it in desktop based applications, insert picture, search data and view it on data grid. Users already familiar with desktop based applications for this kind of tasks.
The picture below show how you can use Extjs to create backend applications. This is the real case from application that I built a year ago, tuneeca.com (ecommerce applications). The pictures show small part of the applications. First picture show you user interface to manage catalog data, and second picture show you user interface to manage sales. The last picture show you how you can create tab based applications and show each module in a tab. Using this solution, you only need to load page once.
Well, this is just simple guide how you can use different type rich client user interface and Ajax in your applications. Consider wisely which type of library you’ll use, or first questions before you use the library, do you really need those library? The library cost bandwith, and library like Extjs also cost performance of browser.