A frequently asked question is what the SSRS infrastructure looks like in SharePoint integrated mode. Well, like this:
Data tier: the report catalog, report data, report server config files and registry, entries in the SharePoint config database, reports stored in the SharePoint content database.
In other words, in production you do need to be able to access reports in a reports library,
None of the above options. If you'd take a look at the SharePoint 2010 Administration's Companion by MS Press, it contains a truly awesome chapter about SSRS and PPS (just bragging, 'cause I wrote it myself :-), and it clarifies the point:
Further details can be found in the SharePoint 2010 Administration's Companion by MS Press.
Ed Price - MSFT edited Revision 1. Comment: Tags and title casing