David:
I vote for option 1: Stop processing and send back an Error --
NotSupported/Error.
I don't like option 2 because it violates the definition of
SOAP:mustUnderstand.
It should be the responsibility of the sending application to
understand the error code NotSupported and retry the
transaction without asking for the unsupported feature if
necessary.
I agree with Marty that if the two parties are governed by a
CPA, it should be extremely rare for one party to request
for a feature that is not supported by the other party.
Regards,
-Arvola