I have no idea about what you're talking.
1. The glute fully contracted at the top bringing the entire body as close to a straight line as possible.
2. Having a slight angle in the hips at the top. If 180 degree is fully extended then for example around 175.
I have been doing option 1 and once I passed the 300lb range it's starting to give me bicep tendinitis (pain is localized to the area where they typically draw blood). So for the last workout I switched to option 2 and pain is gone. Is this something I should be doing?
I have no idea about what you're talking.
He is asking about standing up 100% straight at the top, vs being slightly bent at the hip to keep the bar in balance over the mid foot. Clearly you need to keep the bar in balance.
If he is standing 100% upright then the bar is likely resting on his hands opposed to the back too much, hence the tendonitis.
You're a mind-reader, Sub. But I still don't know what he's talking about for sure.
No, your hips and knees will both be extended. Like it says in the book.
I assume the same has to be true about the front squat, knees and hip fully extended. And in the standing position of both front and back squat the bar has to be over the mid foot. But how is that possible considering the different later position the bar (looking at a side view) has in each type of squat?
The ankles move too.
It's very possible. As Rip said, your body leans forwards or backwards slightly with the ankle joint acting as the pivot point to get in balance. Don't overthink it, just stand up straight and your body will react, it's not just going to let itself fall over with 140kg on your back.