Scholar,
Bowling is of course quite different, but thank you for pointing out the important factor that pretty much all sports have seen tremendous improvement in the last 50 years or so. In 1953, Roger Bannister became the first person to break the 4 minute mark in the mile. There have been countless runners who have done it since.
Chess ratings are not based on a single measure such as the 4 minute mile or 290 in bowling. Chess ratings are based on performance relative to the population. The ratings system is designed
not to have inflation, yet it exists. By inflation in this case, I mean that the average rating has increased. That's impossible without "gaming the system" as alumbrado put it unless the system itself needs to be re-tooled. I suggest that the numbers I've given show that the rating system needs to be revamped.
I'm old school in that I want GM to mean something like "being able to beat one of the best three or four players in the world." Or, put another way, a GM should be a contender.
There are plenty of titles for someone who has mastered the game, and I don't begrudge there being nearly 2600 IMs out there. But there's something sacred
outside of chess circles about the title Grandmaster.
As you point out, the third definition is the most difficult to figure out. FIDE recognised this early on by forcing players to achieve a rating and three norms. On paper, it looks great. But since both average ratings have gone up and there has been an explosion of new GMs on the scene (about 35% of all GMs who ever played gained their title in the last ten years), FIDE should review the system they use.
I am an amateur, but when I beat a GM online, I want to be able to say that I beat someone, and everyone would know who I beat. I shouldn't have to explain that this person is a GM. (Or that it was 3am and he was probably drinking.

)
There probably is no way to roll back the clock and have only contenders be GMs. So for me, the next best thing is to tie the title to a specific, meaningful number. I suggested 97.7%ile. You suggest 99th%ile. That number is not as important as the recognition that the chess community needs to protect its most cherished titles.