Hello Claire
Option 2 for diffusion of velocities is not recommended if you have tidal flats (since there is a division by h in the non conservative term of diffusion).
For the diffusivity, you can increase the value to 0.1 or more is you want. This will stabilize more the model but will smear local features (shocks or wave curvature).
If you want to focus on propagation and run up aspects, you can use Finite volumes with HLLC or Kinetic scheme (first order) and even second order if CPU time is not prohibitive. Your model is not that big, and CPU time will remain reasonble.
With second order you will capture more realistic behavior in the propagation step. You can even couple with Tomawac now (from v7p3) But this coupling was never tested for real big cases and I will be happy to have some feedbacks on it from users.
The other solution also, is the use of Boussinesq in order to capture dispersive effects. This will increase CPU time in a significant way also.
Conclusion: to improve results, you have to pay
kind regards
Riadh