Now, it's high time to say your look-up code should be smart enough to treat valid from and to dates. You must take an ABAPer's help to write and test thoroughly with couple of test cases to get the confidence.
Master data can be handled easily than transaction data. As this resides outside the cubes which has massive amounts of data, you can trouble shoot easily. I strongly suggest you to go with the first approach.
If you have created a genuine new record which has got different from and to dates, then your report will show the combination of new record and the corresponding transaction data. I think you will be using Key Date in your query, as it is dependent on time dependent master data.
Regards,
Suman