Somewhere between the first two. He did kill an awful lot of Saxons (the ones in Germany), converting them at the point of a sword. Also tore down a lot of castles which might have become useful a few decades later when the Vikings hit, but it did stabilize the empire, which he passed intact to his son (mostly because he only had one surviving son).
He was a strong adminstrator, fine general, and was responsible for a brief cultural renaissance in the middle of the Dark Ages. His empire really required a Charlemagne to run it, so it's no surprise it broke up a few decades after his death.