What would happen?

[Crake]

So imagine for a moment you're a nightmare (http://www.d20srd.org/srd/monsters/nightmare.htm). You have 3 levels in wizard and 1 level in egoist psion for the changeling's minor change shape.

Now, imagine you cast alter self to change into a tiefling. You would lose: your natural flight, your 13 natural armor, and your 40 foot ground speed, but everything else would practically remain. Now imagine you use your psion's minor change shape to disguise yourself as a human. Which of the following would then occur:

1) The minor change shape would override the alter self, resulting in the regaining his natural flight, 40ft ground speed and 13 natural armor, and when the alter self spell ends nothing of note would occur.
2) The minor change shape works in conjunction with the alter self spell, eventually the alter self would expire and he'd return to his nightmare form.
3) The minor change shape works in conjunction with the alter self spell, eventually the alter self would expire, but he'd be still in his disguised human form. He would regain his natural flight, 40ft ground speed, and 13 natural armor.

[Crake]

I've decided that based on this rule text:


One Effect Makes Another Irrelevant: Sometimes, one spell can
render a later spell irrelevant. For example, if a wizard is using a
shapechange spell to take the shape of an eagle, a polymorph spell
could change her into a goldfish. The shapechange spell is not
negated, however, and since the polymorph spell has no effect on the
recipient’s special abilities, the wizard could use the shapechange
effect to take any form the spell allows whenever she desires. If a
creature using a shapechange effect becomes petrified by a flesh to
stone spell, however, it turns into a mindless, inert statue, and the
shapechange effect cannot help it escape.

that the correct ruling would be number 3.