I will answer subject to correction from LicensedWaterproofR, or ConcreteMasonry, or Jay in Minnesota, or Home Care Club, or Maintenance 6:
1. No, you will not compromise the structure of the house.
2. No, digging is the best way, unfortunately, and practically speaking, the only permanent way to solve your problem.
3. If your front wall is more than four feet or so into the ground, I believe it is risky...it would be risky for experienced people. If you do decide to dig, do a little at a time, not the whole wall, and remove the soil far away, do NOT pile it up on the edge of the excavation. Most certainly, do not do it alone, in case something happens. An experienced excavator will be able to read the soil type and predict to some extent its behavior; you may not have that experience and skill.
4. That depends on the size of the lava rock. LicensedWaterproofR always recommends pea stone, I think because it doesn't need compacting so it won't settle, and it has enough voids to dissipate hydrostatic pressure, and to allow water to find your drain piping. I yield to someone more experienced than myself here, but my guess is, no, the voids will be too big.
5. I don't know of any inside product that works forever, and it won't keep the water out of your wall, so the water will sooner or later appear somewhere, and you risk the constant wetness deteriorating your mortar joints or even the block itself. Water belongs outside, and that means ALL the way outside.
Gentlemen, and colleagues, please comment.
Architect (NY) and Home Designer (PA)