Forget about "Set compiler options as default" - they only apply when you create a NEW PROJECT. When you open an EXISTING PROJECT they DO NOT APPLY.
Options not specified in the LPI file have a default value, which is hardcoded in the IDE sources.
Very clear and most helpful! Are the hardcoded values documented anywhere?
Short of changing my approach, which is based on my need to compare changes to prior versions, do you have a suggestion on how to keep this from happening going forward?
Other than the suggestions already mentioned, not really or that I am aware of.
I was "stuck" believing that removing the optimization level from the project.lpi file would force Lazarus to use "my" defaults. You've shown me otherwise. Based on your information I will get the developer to set the optimization level to 0 or 1, which should be good for this phase of development, and, once done, won't have to worry about resetting it. I will mark this as solved. Thanks for everyone who helped me through this knothole. Much appreicated!