Partners, Affiliates, and SEO

Hi:

We are one of the worlds leading web sites for Yacht Charter: www.boatbookings.com and we have a very active affiliate and partnership program. We also do limited white label partnerships where content from our database may appear on a partner web site within an I-Frame.
sample: www.mauritius-united-properties.com/yachtcharter.htm
Since the yacht content appears within an I-Frame, our assumption is that it is not crawlable and we won't be competing against ourselves for SEO. Further, the charter enquiries flow through to us, so we get the business and pay the partner a commission.

Now, we have an opportunity to partner with the world's largest yachting web site (3 million hits per month) to become their Charter section.

Given their size, however, they would like a more seamless integration of our content on their site (not an IFrame).

Options which are being discussed are:
1. Use of remote includes. By using PHP includes, the content our content appears to the casual observer to be coming directly from their domain. The exception is the images which show the path to our domain when the page source is viewed. Also, POST and SESSION variables are more complicated to manipulate across two domains, making the enquiry form processing more difficult.

2. Hosting a subdomain on our site. In this model, we would create an "add-on" domain on our server which would represent a new domain within their business. I.e. if their domain is www.boatingxyz.com, they have purchased a domain name called www.boatingxyzcharter.com and have pointed the DNS to our server and we host it. This makes the integration trivial as it's all on the same server (I think)

My concern is that either of these solutions will wind up hurting us in SEO.

Given the importance of the partner, We don't mind sharing our content and we are willing to do as much as possible to make this partnership work as it will, no doubt bring us more enquiries and more business. However, we don't want to totally kill our SEO ranking which we have been building for nearly 4 years.

Does anyone have any clear insight into the SEO implications of sharing content with a supplier and what the least detrimental method for doing this would be?

Thanks tons for your help.