It seems like lots more complex work compared to option 1 on here with the httpd.conf file.
You will still need to create and update the list.
With option 1 I can leave my ID's and make a list of ID's matching the store names right?
With Option 1 you will not have to change the script (unless you automate the list updating).
If I look for a hosting that will give me access to httpd.conf file, will I get the same results on my urls as I am looking for such as
mysite.com/coupons/Sears
You can have /coupons/Sears using the httpd.conf file.
will they be treated the same by search engines when they display it on the search results.
How mod_rewrite does it will not matter. You might want to read
Google: Dynamic URLs vs. static URLs, though.
Once I have made this in both the httpd.conf and .htaccess will the href= links read as the ID number or will they read as the store name?
With all mod_rewrite, the href="" attribute must be the URL you want in the address bar of the browser (ie. href="/coupons/Sears").