The serial console is working at 115200 bps, 8 bits, no parity, 1 stop bit, no hardware/software flow control, but I bet you already checked that
Be carefull too, the TL-WR703N's AR9331 SoC GPIOs are 2.7V only, NOT 3.3V, and this of course includes the UART signals. I have seen some adapters (including FTDI's...) that don't work at these low voltages and require a pull-up resistor between +3.3V and TX (TP_OUT) to work, can you try that?
I never had problems with cheap Nokia CA42-clone Prolific chip-based cables, though.
As for your suggestions:
A: no, it doesn't work that way: the TL-WR703N's USB port is a host port, meant to connect to USB devices. The "USB serial" you describe converts a (TTL or LVTTL-level) UART to an USB device interface, so it can't be used for this purpose
B: I totally agree with you: I proposed to activate WiFi only during initial setup or when reverting to it, and using the last MAC address digit written on the device label to scramble the SSID, but not everybody seems to understand the interest of this feature