Confusing offer of voluntary redundancy, demotion or status quo - Pls help!

I work for a professional services firm. Recently I was given the option to:
1) take a voluntary redundancy package
2) stay, but get demoted
3) stay, but nothing changes i.e. no demotion or salary deduction

The VR was stated in a letter but the second and third options were not in writing. I wasn't given any details on the demotion option.

The first two options were stated by the partner early in the meeting while the third option was only pointed out by the HR person as the 'implied unsaid' option that I have. It was clearly only mentioned after the partner was done telling me the first two options. I felt that the third option was added as an afterthought as it directly conflicted with the second option.

The offer of VR was not open to all employees. It was very discretely offered to a small group of selected staff. I was told that it was not a performance related reason that I was selected. But rather it was due to changing business model which made the business to review its staffing level. The firm is growing and is still hiring new staff across all levels and positions, including mine. I was unable to obtain further details on the reason. I was never given any warning before. I have been with the firm for almost 7yrs and have always received above average ratings. In the recent annual appraisal, I was also given an average rating but nothing was mentioned about me needing to improve or risk losing my job.

In addition, I am currently pursuing a part time postgraduate education as a personal development. I have to take frequent time off from work in order to pursue the studies. This slightly affected the ability of the firm to put me on projects but the firm committed (on paper) to allow me to take the necessary time off for studies. Does the firm has the right to use this as a reason for selecting me for the VR?

With the first two options (VR or demotion), I feel that I have been singled out and am being forced to leave the organisation. Can the company do this?

Although it was mentioned that I was not selected for performance reasons, doesn't the offer of demotion clearly implies that the company does not believe that I can continue to deliver at my current level (and hence performance related)?

I have only been given 1 week to consider. Do I have the right to ask for longer timeline to consider? I managed to obtain an additional 3 days of extension as I was only told the day before I was going on international travel.

If I reject the offer and chose to stay at the same level, could the company turn around immediately to force a compulsory redundancy on me? It was stated in the letter that the company may have to reduce staff on a compulsory basis, in which case they will consult the employees affected.

With the uncertainty in the economy, I not keen to leave the company as the payout isn't great. However, since the demotion was included as an offer, I feel being forced out and uncomfortable to stay on.

Has the company violated any rules and what options do I have (besides the three above)?

Thank you.

I am afraid that my answers will be a bit brief as I am playing "catch up" after a holiday - if anything isn't clear, query it. But this one I fear is pretty clear.

VR is voluntary - on both sides. It is not regulated by the law. I am sorry to be blunt - your personal development, supported or not in the past, is in their way. What you have is the writing on the wall. You actually have two choices - 1 & 2. Option 3 is the route of compulsory redundancy I feel, unless you are prepapred to drop all outside study and apply yourself to being well above average. And it may be too late to take that option up anyway. Sorry, but you have some serious thinking to do.

Thanks for taking time to provide your views!