It's #2 on your list.
PS: If you use MIDs and haven't edited the database, it always assumes 1 ally is in range.
Most people use Phalanx fighting for the 3.75 defense buff to all three position and now you have a place to drop a kismet or a lotg in your build 
Pinnacle
Langar Thurs-Katana/SR 50; Hejtmane-DM/DA 50
Rogue Spear-Spines/DA 50; Hypnosis-Ill/Rad 50
Sir Thomas Theroux-DM/SR 50; Melted Copper-Fire/Shield 50
Byzantine Warrior-DB/ELA 50;Blade Tempo-50 DB/EA
Thats what I was afraid of. I was hoping to slot it and boost the 3.75% up to 6%. Now Ill have to put those slots to other uses. Thankfully those slots were coming later (only 28 right now) so I dont have to burn a respec on the mistake.
I do have 172 merits built up. I could run a TF this weekend and get a LOTG so the default slot is useful
Quick question do you get 3.75% for each ally near you as well? Or is it a lesser amount? Is there a cap on # of allies?
It's 3.75% fixed, base, regardless of teammates in range. Then it's additional whatever it is for 1 to 3 teammates in range, that's enhanceable. I can't even remember the number because it's just gravy anyway. You're still giving it a nominal enhancement to that portion even with a LOTG. Base slot for kismet, LOTG, or if you're feeling very saucy, the +Res PvP IO.
Grant Cover is another power that can get by with the base slot if you're in a pinch, even if it's defense and not endurance, since it's a pretty cheap toggle.
For Scrappers it should be 2.25% enhanceable per allies in range.
Poisonous Ice 50 Ice/Rad
Icy Jax 50 Ice/SS
Jaxon Penn 50 Shield/Mace
Cpt Clax 50 Thugs/Dark
Lady BlackIce 50 Dark/Cold
Lady Black Ice 50 Dark/Ice
Bella Jax 50 Storm/Sonic
Operative Jax 50 SoA
Level 50 Trick Arrow Alts
TA/A-Plant/TA-Bots/TA
Level 50 Claws Scrappers
SR-Regen-DA-Invul-WP-FA
It's #2. Leave it at the base slot only and don't count on any additional defense from allies. If you ARE getting an ally bonus from it you aren't getting the most out of Against All Odds which gives you both a per mob damage boost and debuffs the damage that those mobs deal.
-Insanity is doing the same thing over and over again and expecting different results. - Albert Einstein.
-I do not feel obliged to believe that the same God who has endowed us with sense, reason, and intellect has intended us to forgo their use. - Galileo Galilei
-When injustice becomes law, resistance becomes duty. - Thomas Jefferson
I just respecced my BS/SHD last night and picked up this power. I dropped a defense IO in it. The values didnt seem to change .
Does this mean:
1. The power is not enhanceable for defense?
2. The additional defense boost from IOs only applies to the portion of the buff from close allies?
3. The ingame details are borked, and it is helping.
4. Some other possibility I am not aware of?
If it is #1 the only thing I can to do is drop some sort of unique in the slot. If it is #2, Im going to have to figure out how much I group to determine if it is worth slotting
If anyone could help clarify what is going on with this power, it would be greatly appreciated. Also, if you happen to have it, how did you slot it and why?