doubling up on domain names (bilingual) will google hurt me?

I have a very specific question that I cannot seem to find an answer for, and since WPMU is my go to place, and has saved my a$$ on so many occasions, I thought I would through it out to you.

I am in Quebec (bilingual : very important) and I have a client that needs to not alienate either language. This in itself would not be a problem, but we feel that he would benefit from having his product in his url.

Option (1)
Go with and and this would be cool if we had an idea bob sold donuts.

Option (2) for english content for french content.

Now this means that he has to maintain 2 sites and linking translations could get messy quite quickly. (I love the ease of WPML for this.)

Add to that, he might want to sell donuts online too. Now, there is no way we would duplicate the store also. that would be too expensive and again problematic as soon as changes are made.

Option (3)
I have been reading forum after forum (not here) and have learned that if I were to set up as the actual site, and that anyone typing would be redirected to And this is great but I am more coencerend with SEO traffic. Would people typing donuts in the search bar ever see, or even and would that type of 301 redirect hurt the rankings?

Arrgghh! Any thoughts, and I do mean any thoughts, would be much appreciated.