I think you're missing a perfectly valid option, one which I use often. This is my typical schema and it has yet to fail me... :-)
Here's the basic jQuery template I use:
$(function() {
$.getJSON('/some/page',{foo:bar,bar:foo},function(json) {
if(json.outcome == 'success') {
$('body').prepend(json.html);
} else {
// Somehow let the user know why it didn't work
alert(json.error);
}
});
});
Here's the basic backend (PHP in my case) structure I use:
<?php // Page: '/some/page'
/* Blah Blah Blah... do whatever needs to be done... */
// If everything turns out okay (assuming '$output' is the HTML
// you want to display...
echo json_encode(array('outcome'=>'success','html'=>$output));
// If something goes wrong... just do:
echo json_encode(array('outcome'=>'error','error'=>'Uh oh... something is broken'));
Naturally, you'll want to be more specific with your error by putting them into some variable or something. But, you should get the idea. Also, of course you can add more information to the json output. You can have some pre-made HTML and also some other information like a 'success notice' or a new class name for some element, I dunno... whatever... the possibilities are endless.
Anyways, the reason I choose this route is because it's usually faster (based on my experience) to append pre-made HTML to the DOM rather than looping over JSON and inserting the stuff unless it's just, like, a bit of text to replace into an element. But, the method I've shown is, IMO, the best of both worlds. You can attach HTML as a string to one of the JSON properties.
Happy jQuerying :-)