It's number 3. In Crazyhouse if you capture an opponents piece, or an opponents pawn then that piece changes color, and you can later place it on any empty square as one of your own pieces. Pawns can be dropped on any empty square between the second rank, and the seventh rank. Also if a pawn promotes, and is captured then it goes back to being a pawn.
Crazyhouse
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I just played a game in crazyhouse 3+0 and had several odd moves come about. Well not odd per se just impossible. Several times, a piece appeared at random in a position it could not be in and pieces removed from board were added in. Without promotion, I also had to face off with 3 bishops. So my question(s) are: 1. Did my opponent hack the system, 2. Was their some monster glitch that only helped him, or 3. Does crazyhouse have some obscure rules I should have looked in to before starting the game? I think the last may be the case because even the annotation for his moves was atypical.