Please just delete this, or reduce it to a pointer to the Wiktionary article.  There is already a wiktionary entry with more accurate usage information.  In particular

 Dictionaries list both meanings, so it's meaningless to say that (1) is correct by the dictionary defintion.  True, it follows the etymology more closely, but the fact on the ground is that the meaning has changed.  This happens.
 If there are any good attestations to support usage (2), please provide them.  Doubtless this is the re-analysis that led to the current usage, but decimate doesn't seem to be widely used in this precise sense.
 Usage (3) is current, with (1) generally restricted to contexts where the reader is expected to be familiar with the original sense (e.g., historical accounts).

For more discussion, see the Wiktionary entry, its discussion, and  my discussion page on Wiktionary.