Absolutely! I agree with #2! I love it when authors give the readers the opportunity to envision what particular things in the story are to us...for instance, when events occur offstage in drama (the battle scenes in Shakespeare)or they are vaguely described (Grendel in BEOWULF) so that the audience can picture them for ourselves. This guarantees that the war is brutal or the monster is terrifying...we create in our own minds what it is like, thus making every member of the audience an interactive part of the performance. Very cool stuff.
"It" can be whatever you want it to be - no pun intended. The very basis of this novel, good vs. evil, allows you to view It as your own personal demons or troubles. WIT seems to try and make It some variation of the devil, religious wrongs and troubles, but it certainly isn't limited to that.