I worked concrete one summer while I was in high school, but I'm no expert and it was a long time ago. That being said, here's what I would try:
I'd give both of your solutions a shot first. However, if you end up completely destroying the two chips, I'd try to pour a new corner. Drill two holes into the corner of the foundation and dowel into it with a few inches of 3/8" re-bar. After you've hammered in the steel, form up the corner and pour the concrete.
Also, this forum includes discussion about how to repair similar cracks.
This website also explains a bit more about this type of foundation crack:
Brick that is laid directly in contact with concrete foundations can cause angular cracks like this in the top 12 - 16 inches of a foundation. These cracks are caused by the brick expanding and pushing the outer corner of the foundation with it. The cracks are not major structural problems.
It is often pointless to repair them as the next time it gets hot, a crack will likely appear in your repair material.
I think the answer depends on what "pretty mushed" means. And before you read on, here's a caveat: my sole experience with chain link fences is taking them down, not putting them up (but I've taken down quite a few :-)).
That said, my experience is that the links will collapse in on one another, not actually bend. Which means that the fencing as a whole can be straightened out again. Also, even though the posts appear untouched, you should ensure that they're plumb.
The rails are easy to replace; every home center should carry them, as well as the caps and other accessories. The important piece that you'll need is a coupling: a short section of pipe that fits snugly over the ends of two existing pieces, to join them together (in the fences that I've disassembled, this is just press fit, not welded or brazed, but I suspect a dab of epoxy would help).
Cut the existing rails with a reciprocating saw, close to the existing rails that still have caps (you could also use a hacksaw; you won't be able to get enough clearance to use a pipe cutter). Slide the new section(s) of rail through the caps, attach them to the posts, cut to length, and slide the coupling in place.
That just leaves re-attaching the fencing. I think that you can stretch it to the rail using baling wire and a pair of pliers: loop the wire through fence and rail, and twist it to take up all slack. Then attach normally.
Best Answer
This doesn't look like foundation damage. This is a settling of the pathway around your house. Good news is that it doesn't look like serious problem, at least from what I can see from the picture. This issue should be fixed because it will only get worse, and then rain water will go under you foundation and that could be a problem. You should demolish pathway preferably all of it, if not than at least parts that have sunk. Then, pour some gravel and compact it. Over this layer you can pour concrete, of course use reinforcement meshes, so the new pathway wouldn't crack. Also, I like to divide these paths every 2-3 meters with a piece of wood or even better with Styrofoam which I take out after concrete has hardened. These way pathways can "breathâ. I forgot to mention that it should be under slope so that water would go from the house.