The latter. Read the Byzantine history of the Mandylion and you'll see just where I'm coming from. I believe the Image of Edessa wasn't a cloth (which would have decayed very quickly) but a piece of statuary. Cloth and statuary were supposedly discovered in Edessa five centuries after they had been hidden from view. The cloth was considered miraculous, not the statuary, which was referred to as the Keramion (tile) and subsequently became lost to history.
Incidentally, I'm not sure that the actual shroud depicts anything of crucifixion, in and of itself. The evidence of crucifixion is based on the bloodstains, which I'm not convinced were part of the original.
I bandied this hypothesis about, many years ago, but didn't get much support for it. The problem is that no one, but no one will look at the Shroud objectively. It's either the burial shroud of Christ or it's an utter hoax ... nothing in-between.
The nails were driven through the wrist between the radius and ulna bones because that's the only way they'd support the weight of a human body. If the nails were driven through the hands then the hands would just tear away from them.