Of course the second approach is the right one. It's like at work, I can put up with being told what to do, but I absolutely hate to be told how to do it. So just give objectives and leave a bit room for creativity.
Concerning the high command role, I don't think this job has to be boring. After all it's the role of the strategist taking care of the greater good and seeing the greater picture. You decide what every subordinate has to do and you give or take away forces.
I'd even suggest to strip the army groups of a couple of corps for reserves at your disposal. Perhaps build up a strong 2nd army and a reserve mot. corps (perhaps the XXXX) and do NOT add it to any army group but leave it to yourself and move it, where you think the focus of battle should be in the upcoming turns. And then either allow the army group commander to play it, or even play it yourself.
When I get a bit more experience (perhaps after this game) I could think of taking this role myself.
Slightly opposing views in the two posts above, but both interesting. The idea of forming a strategic reserve and employing it as CinC is a novel one. I'll give it some thought, although it might be difficult to 'squeeze' a reserve army into line between the Army Groups without causing problems...
Now, Harovan, I would like you to move 1st Infantry Div to hex 55x67 and then move 2nd Div to 55x68 before moving your 3rd Div to 55x69. Any questions about my 'intent'? LOL