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As you wrote in your question, it is best to only link when the product exists in those other countries/languages. Both of the options about which you inquired are problematic, for different reasons. I would say that if you can't adjust the application code to only include hreflang when the pages really exist, then I think you should remove the hreflang tags from the pages, and instead manually create your sitemap with hreflang implemented there. That means your sitemap would not be perpetually up-to-date. But a slightly out-of-date sitemap with correct hreflang tagging would beat either of the options you listed above.

Although I have seen no evidence or documentation that local GMB listing reviews have any impact on non-localized search results for a brand's non-local homepage. However, the picking apart of each little ranking algorithm factor is short-sighted. These things do not work in a vacuum. I have a client with a single location who does mostly eCommerce. But they allow people to come into the warehouse and buy directly if they happen to be in the area. This means we can get a GMB listing, and reviews for the location. I fully support this strategy, even if it doesn't help the homepage rank better.