The second option would seem to be the most prudent - just expand on your points but gently explain politely that you have no intention of taking the application (or discussion) further.

You certainly have no obligation to meet him and the last option would seem to be lose-lose.

Reading between the lines, I suspect they are having problems recruiting (possibly for the reasons you've outlined). You were no doubt, an excellent candidate which is why he wanted to meet up to persuade you but it has to be a good fit on both sides.

Let's reverse the roles, and say theoretically you said something in an interview that rubbed the hiring manager the wrong way. Would you expect the company to explain to you exactly what you did wrong, so you can argue it away, or do better with the next company perhaps?

That's not just a no, but a hell no. You'd get a nice impersonal "We decided to go another way. Best of luck in your future search." note, and no further official communications whatsoever from their end.

So why should you give them more consideration and help than they would give you? Are they perhaps going to pay you for your time consulting with them to improve their hiring practices?

You owe them nothing more than the same firm professional politeness that they'd give you.

Consider giving them (and yourself) another chance. Either one of you could have been having an off day.

I once interviewed a job candidate and came away with a bad impression. Everyone else thought he was great. I was the hiring manager, so was ultimately responsible for the decision. I decided to bring him back in. We talked for twenty minutes, and I came away with a completely different impression. I hired him, and he worked out great.

Sometimes you do get a second chance to make a first impression.

explain again with a generalised statement via email that it wasn't a good fit etc. (risking that he still pursues the idea of a meeting).

Use this. Say that it wasn't a good fit for you that's it.

If he tries to pursue another meeting, politely decline it.

Hi x, I'm sorry but I do not want to have a meeting.

That's it

Alongside option 2, if they continue pushing I'd say that you don't have time for a meeting:

I'm not available for a meeting due to other commitments. I won't
be continuing with my application for the role.

If they push after that, you've already let them know you're not available, so ignoring them, while it may irritate them, will be acceptable. The key is making them aware that you aren't going to spend your time on the matter any further, in a polite manner.

The fact that they consider you the best candidate is both unknowable and unimportant.

If you are uncomfortable about a key aspect of the position, you have every right to terminate, or you can request more information or you can negotiate the issue.

You have no obligation to provide any more information. You have no obligation to reopen the hiring process. I would ignore the request for additional contact. I wouldn't even respond to their email.

I wouldn't fear being blacklisted. Every position I have been involved in filling has had one or more applicants/candidates drop out. The reasons have been many, and unless the dropout was after the offer letter it has not resulted in bad feelings. That being said there were times where we reached out to candidates who we really liked.

just reinforcing @Eigentime answer.

I would go with telling them the truth, start with explaining how the job itself seemed like a nice fit and you are confident you would be able to achieve what they expected of you, however during the interview you felt that there was a personality clash between you and the interviewer. Knowing that you would have to report to them you could envisioned this being a problem for both and could lead to you looking for a job in the near-future and because of those reasons you would like to respect both your time and theirs and allow someone else who can achieve the requirements and is also a better fit character-wise with what they need.

If you are then contacted by HR instead of the person who interviewed you, then you can disclose further if you wish.

Although I agree with the other answers posted so far that sticking to your generalized statement would be the most prudent action, I still would advocate for telling the truth (i.e. your third option).

Mismatched personalities are a real thing and I doubt anyone would think negatively of you if you state this in a thoughtful and respectful manner. Avoid putting blame on the other person and you should be OK.

By being honest and open you show the company that you are able to work through problems maturely which may be beneficial to you in the future. In addition, this gives them a chance to find a solution that could work for everyone involved (e.g. putting you into a different department).

It depends on who the point of contact is at this company.

If your point of contact is this team leader directly, then your second option is probably the best. Just try to be non-commital and give a very general "thanks but no thanks" answer.

If your point of contact is someone with authority over this particular person (HR or someone in the chain of command above this person), I would go with the 3rd answer. For you specifically, it gets off your chest the frustration of a bad interview. For the company specifically, it tells them that if they want to hire good talent, then a) this person should not be conducting interviews, and b) perhaps this person should not be a team leader at all. For both of you, it helps to clear the air and make sure that each party understands the other.

As for "looking like a jerk", it's all about how you say it. There's a difference between:

In our interview, Jack was a complete asshole to me. He kept whining about how my solution wasn't absolutely, positively, the most perfect thing he's ever seen, and he berated me over every little mistake I made. I think Jack would be a shitty boss to work with, so I quit.

and

In our interview, I was somewhat uncomfortable with Jack's demeanour. In specific, when I answered question XYZ, he was very sarcastic about how my solution performed. Specifically, he said ABC about my solution, and I thought that was very unfair of him. Additionally, [give another example or 2]. Based on this interaction, I feel like I would not work together well with Jack if I joined the company, and I'd prefer to not waste everyone's time pursuing an opportunity that I would very likely reject in the end.

I would suggest a fourth option. Figure out who is the manager of the person who did the interview with you (just call the switchboard and ask for NN's manager) and then forward the e-mail to this person and explain honestly why you don't want to go to this follow-up meeting. This manager will then surely tell the interviewer that you two have been in touch and that there is no point in follow up meeting and (s)he should give up the idea.

You can also, if you feel like it, ask this manager for a favor along the "pay it forward principle": "now when I have been honest to you [and done you a favor], I would ask you to do the same to someone you decline after an interview in the future".

I was in this same situation a while back: cool company, nice sounding job, but in the interview one guy just gave me a really bad vibe. He had this mean look in his eye like he would be awful to work with. I passed that round but declined the second, explaining to the recruiter my gut feeling.

This is important, if it's fed back from the recruiter to the interviewer and his management then they may have words with him about his technique.

Don't ignore the recruiter as he may have other opportunities.

IMHO, employers need to know that this behaviour from their end is unacceptable. You should go with option 3 in a subtle and professional way. There's a big chance that everyone in that company already know that the interviewer's approach is bad but because no one complained and they end up finding a candidate, they let it go and he keeps his bad attitude during interviews under the illusion that he is testing candidates under pressure.

The fact that you are their top candidate will send a strong message about how misplaced this approach of interviewing candidates.

suggested a meeting in person to hear my reasons why I declined.

If I got such an e-mail, under the circumstances described in the question, my response would be “No, thank you. I have made my decision and do not wish to discuss it.” And as soon as I sent it, I would delete that e-mail address.

(Whenever I have to give an e-mail address to someone I don’t know, I create a new one which gets deleted as soon as I receive or even expect to receive spam or other unwanted messages.)

Ignore them and move on.

Lots of answers here but none really address this quote:

“I received an email from them today expressing surprise and saying that I was their top candidate. As the person lives nearby, he suggested a meeting in person to hear my reasons why I declined.”

This alone is incredibly unprofessional of them. Unless you have a reason to keep a connection with this organization in any capacity; professionally or personally.

So my advice would be they have demonstrated to you via their actions behavior they generally stink as an organization. Just ignore their emails. And honestly you should have ignored their first mail to you.

If you feel that somehow your input would help them stop deluding yourself; they are simply making you feel comfortable for their benefit not yours.

Life is too short and work is not life.

You don’t owe someone who interviewed you for a job and made you feel uncomfortable anything more than a regular person who makes you feel uncomfortable: Ignore, move on and find the company you can feel comfortable in.