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I would keep Door #2 closed and open up Door #1.
It sounds like this is going to be a decent sized project and , if done properly, will add value to your home. We build all of our raised patios with the proper wall size and would never think about trying to add a berm to build upon, especially at 18" - 24" above grade. Seems like a major instability issue in the coming years.
Plus, at 38' long, I would imagine you would probably want a set of steps near both ends and I just can't envision a 2' high raised patio with a set of steps stuck into the berm.
Keep us updated!
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