I understand that particle effects can be used for a variety of fine detail - but what are the performance implications? Would particle grass be overkill?
Depends on what you’re defining as “particles”. If you’re defining the shape of each blade of grass using a static particle emitter to trace the shape of the leaf, that would probably be overkill. Placing individual blades as particles might also be called overkill, but it would depend on the size of the scene. Pseudorandomly generating grass clumps as defined by a parametric formula is just about right, and still qualifies as “particle-ish”.
I’d considered options 1 and 3 and I was tending towards 3 for the reasons you suggest. I just need to figure out how to get static particles out of JMonkeyEngine 3. The game I’m planning seems to be all particles - clumps of grass, fog and fumes, magic, fuzzy monsters, cozy campfires, snow, rain. Maybe it is because I seem to get nice effects from particles and horrible models from Blender 
Hide them behind all the fog and fumes!
For individual blades of grass it’s probably best to use something like instancing. There are lots of good papers on the internet on drawing grass in games actually.
We use a couple of thousand particles per frame in a relatively busy action scene. Seems to work out ok for us.
Cas