Lets go through all the options:
1. My friend studied International Studies at UNSW and achieved a D average and managed to transfer to UNSW Law after a year. I think UNSW guarantees a certain amount of places (100 places to be exact) for internal transfers. My friend's ATAR was around the 95 mark.
https://my.unsw.edu.au/student/academiclife/program_transfer/program_trans_Law.html that's further info on the UNSW internal transfer program. They do not take into consideration your ATAR, so if you achieve great grades in first year, you have every chance of transferring. Since the WAM is the sole consideration, you should do subjects you enjoy, work hard for a year and achieve that 78-80 WAM will should definitely put you into contention. If you have a high ATAR (> 95) you can also apply through UAC which would take your WAM and ATAR into consideration for a placement in UNSW Law. Remember that the internal transfer program is not independent like UAC and hence, possibly easier to get you into Law. If you don't make it, you can apply for a JD at either UNSW or USyd, either one is fantastic, but UNSW considers just your WAM so if you maintain a D average you should make the UNSW JD program.
2. This is also a good option, USyd Arts is great, I really enjoy it and it is definitely one of the best liberal arts faculties in the country. Once again, since UNSW JD do not consider your ATAR, you would need to have a high WAM (in the 78-80 range at least, imo).
3. If you study a BA at USyd, then the JD at USyd would be the natural thing to do. The JD program at USyd comprises of 25% ATAR and 75% WAM from uni + an interview (don't quote me on this!). They recommend you to have an ATAR above 90 and a WAM in the credit range. This is bullshit. You need a WAM of at least 75 and if your ATAR is less than 90, that WAM would need to be closer to 80 (which is completely achievable if your determined and hardworking). Remember by doing a BA at USyd (or UNSW), you can apply to a JD program anywhere in Australia, provided you have a high WAm and for USyd, a decent ATAR.
Overall, the best option of these 3 is the first one. Imo you have nothing to lose by doing this and everything to gain. It opens up the opportunity to study a combined law program within 1 year, instead of a postgraduate degree. And if you don't achieve this you can still apply for a JD program at UNSW (and potentially USyd).
Remember that the JD is becoming increasingly popular these days and it is a lot easier to get into than undergrad combined law at either USyd or UNSW, thus, a lot more people are tending to do this. The competition for places in the JD program is thus increasing, so you will have to be committed 100% to uni for those 3 years if you want to get into the JD program. Also remember that ANU has a great JD program and so does UTS, if all else fails.
As for which program is better, well I currently study Arts/Law at USyd and absolutely love it. Both programs will enable you to pursue your ambitions and get you far in law, if that is what you want. I personally felt USyd's law faculty was better and had more opportunities.