If I use outsiders on my opponents Superman would he still be able to use HSS, since HSS modifies range and range is a combat value? Or does the halved range count as a replacement value?

Halving is a replacement, so Outsiders has no effect.

I was afraid that was going to be the case, thanks for the fast reply btw.

yeah as far as I know Outsiders only works on Option 2 if you use it on the opposing player.