L1 B Blanket Extension at Consulate

[adg]

I have been reading a lot on this very helpful forum and most of my questions have been resolved. However here are few questions I need help with:

My Situation:

L1B Blanket Visa expiring on Feb 2014 (approved on Feb 2011)
I-94 Valid till Mar 2014
(Same for my wife)
Wanted to file extension from US but attorney strongly recommended consular processing as success chances are higher and the process is easier.
I am travelling last week of Nov-2013 to India and back by last week of Dec-2013
Applying at the Chennai consulate for an extension first week of December.

Questions:
1. Is my attorney right? Earlier I thought filing extension here would be safer but from my research so far I have a feeling he is indeed right.
2. Lets say, my extension is denied at the consulate in Dec-2013. Since my existing Visa is valid until Feb-2014 I should be able to come back (and wrap things up here and exit the US in a clean way if required). Is that assumption correct? Can they cancel my existing Visa?
3. Again lets say my extension is denied, how soon can I re-apply? And if I reapply does it have to be L1 Individual petition or can still be L1 Blanket? Anything else to consider?

Thanks for you help.

[adg]

I did some more research and I read some people mention that in this case it is more like a new application than an extension.
Any help on my queries above will really be appreciated.
Thanks