I don't remember being in leagues that explicitly addressed these scenarios involving traded draft picks, or that had controversies over any of this. In neabaseball's scenario above, I would go with his Argument #2. Once your roster is full, you don't have any remaining picks.
I do remember making a trade once that was something like "My 1st, 2nd, 3rd, 4th, 5th, 6th round draft picks for your #1 pick", when my team had three open roster spots and another team had maybe 10 open roster spots. Without the trade, I would have drafted three mediocre players at the end of the 1st, 2nd, 3rd rounds. With the trade, I got one great player in the first round and then two awful players in the 7th and 8th rounds. That was good for my team. The other owner needed depth and was able to complete his roster after 5 or 6 rounds of drafting, instead of going into a 10th round. He figured that was good for his team. I didn't see it as controversial, and no one in the league complained. But by some of the reasoning in this thread, I would not have had 4th, 5th, 6th round draft picks available to trade anyway. I've always assumed you have a draft pick in every round, until your roster is full. Then once your roster is full, you shouldn't be trading away a subsequent draft pick.