Is one option "better" than the other for the community?
This is a somewhat nuanced question unfortunately. It depends firstly on whether you are planning to open up you node for inbound connections (thus allowing others to sync blocks from you) and whether you also open up the RPC (so other user's wallets can use your node as a remote node). If this is your intention, then the more bandwidth you make available, the "better" it will be. So when judging which route to take, factor in your bandwidth costs too.
Is there a risk to my home network if I run the node at my house?
If you run an open node (so having p2p and RPC open for inbound connections), the biggest "risk" is having your bandwidth exhausted. To mitigate this, you can make use of the daemon options:
--limit-rate-up arg (=-1) set limit-rate-up [kB/s]
--limit-rate-down arg (=-1) set limit-rate-down [kB/s]
--limit-rate arg (=-1) set limit-rate [kB/s]
You should also make use of the
--restricted-rpc flag, or use a separate port for public usage via
--rpc-restricted-bind-port, to ensure you don't leak any unnecessary, private information.
I know I need to forward a port, but does the monerod software encrypt all traffic?
Traffic is not encrypted (although there are some SSL features coming in the next release). If you goal is to offer an extra layer of privacy for users, consider running the node as a tor/i2p hidden service. That would be very helpful as there is easier tor/i2p integration coming in the next release too - and the more nodes we have on privacy networks, the better.
I hope this is useful and thanks for considering taking the extra step for the ecosystem.