Stick to the K1, your fiancé's daughter is already 19. If you switch the the spousal visa she will not get a visa through you. He would have to petition her after he comes to the US. It would be years for her to get to the US.
The 125% poverty line applies when you get to the adjustment stage. Either get a sponsor or a another job/second job. When he goes next week for his interview you only need 100% for income. As long as the CO doesn't want more.