Asbestos?-cement row of siding: remove, paint, or cover?

One side of our otherwise cedar clapboard house has a single row of 8" cementatious looking clapboard siding below the metal drip edge -- presumably it was put there because the row is essentially in contact with the ground.
Since that part of the house was added/renovated in the mid-40's, I'm assuming that it could be asbestos-cement siding.
After 60 years, that cementatious siding row has a top flexible, putty-like, painted layer that is peeling away in a number of places. (it's thicker and more pliable than just built up paint -- I don't know whether it is the top layer of the siding peeling away or whether it is some product applied to the surface at some point)
I have considered three choices: 1. Scrape away the peeling layer and repaint the row (but if the board is fiber cement, that may not be a good idea, also the surface beneath the peeling layer is rough looking like old cementatious siding and doesn't match the rest of the smooth cedar clapboards)
2. Cover the row with a layer of new (non-asbestos) fiber cement siding (like from Harvey Industries). I could probably get a 5/16" board to still fit under the drip layer. I would presumably caulk along the top both to adhere to the top of the underlying old board and to the drip edge.
3. Remove (carefully with asbestos precautions) the single row of old cement-like siding and replace with a new row of fiber cement clapboard (or other rot resistant board).
I am most seriously considering #2 or #3. I like #3 because it gets rid of the problem though if the original is asbestos, I could be exposing myself to some risk (even wearing a respirator and wetting down the siding), though it is only a single 20 ft row so it probably couldn't be too bad. Also, any time you remove something, I could be creating more problems than I am solving.
On the other hand, I like #2 because it avoids the need to remove the original siding but it may not look as good aesthetically and I don't want to do something that is just a patch solution.
Any thoughts?
Also, given that the bottom row of siding (below the drip edge) is very close to ground and that it is not easy to regrade the property there to get the current code requirement of 6" clearance, what type of synthetic siding or trim is best used in such a near ground situation?
The original cementatious siding seems to still be pretty intact after 60 years, so I am pretty tempted just to use a modern fiber-cement product since it should be rot resistant anyway. Is this OK or are thee better products?
Thanks
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blueman wrote:

I vote for #2.
Whether asbestos shingles are dangerous is a matter of debate. What isn't debatable is that lots of jurisdictions have strict requirements for removal and disposal, and the costs can get high quickly for even small jobs.
Encapsulation (sealing up) asbestos is usually the recommended solution.
--
Steve Bell
New Life Home Improvement
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blueman wrote:

You will not have a problem removing asbestos boards. There has never been a case of deleterious effects from any commercial product containing asbestos (brake pads, asbestos flooring, insulation, ceiling tile, anything).
According to my quick calculations, the moon will be at its minimum on June 30th, and won't rise until almost 3:00 a.m. Somewhere in there is the time to place your removed boards on the local elementary school's playground.
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