I think #1 would be my preference, although if you do go with #2, I would make the steam jet attack a touch attack.
Right. I was kind of assuming that the steam jet would be a touch attack. The weapon description does specify that it works just like a steambreather, so I was thinking of keeping with that. Until I double-checked DMech and realized a traditional steambreather produces a cone.
Um, yeah. I think I'll keep with the idea that the steam jet is weaker than a steambreather, since it wasn't meant to be used that way, and say it always attacks as a ray. I'll definitely admit that #1 is a much nicer ability. But #2 really calls to me for its flare.