I would suggest creating something that parallels the ObservableCollection<T> where appropriate. Specifically, I would suggest following the existing techniques for notification of change of collection. Something like:

class MyObservableCollection<T> 
    : INotifyPropertyChanging,   // Already exists
      INotifyPropertyChanged,    // Already exists
      INotifyCollectionChanging, // You ll have to create this (based on INotifyCollectionChanged)
      INotifyCollectionChanged   // Already exists
{ }

This will follow established patterns so that clients are already familiar with the exposed interfaces-- three of the interfaces already exist. The use of existing interfaces will also allow more proper interaction with other already existing .NET technologies, such as WPF (which binds against the INotifyPropertyChanged and INotifyCollectionChanged interfaces.)

I would expect the INotifyCollectionChanged interface to look something like:

public interface INotifyCollectionChanged
{
    event CollectionChangingEventHandler CollectionChanging;
}

public delegate void CollectionChangingEventHandler(
    object source, 
    CollectionChangingEventArgs e
);

/// <remarks>  This should parallel CollectionChangedEventArgs.  the same
/// information should be passed to that event. </remarks>
public class CollectionChangingEventArgs : EventArgs
{
    // appropriate .ctors here

    public NotifyCollectionChangedAction Action { get; private set; }

    public IList NewItems { get; private set; }

    public int NewStartingIndex { get; private set; }

    public IList OldItems { get; private set; }

    public int OldStartingIndex { get; private set; }
}

If you wish to add cancellation support, simply add a writable bool Cancel property to CollectionChangingEventArgs that the collection will read to determine whether to execute the change that s about to occur.

I suppose this falls under your Option 2. This is the way to go because, to interoperate properly with other .net technologies that monitor changing collections, you re going to have to implement it anyway for INotifyCollectionChanged. This will definitely follow the policy of "Least Surprise" in your interface.

I would recomend seperate events. It seems more clear to me.

EDIT:

You might want to cosider a before and after event such as Inserting,Inserted or as the VB guys have it BeforeInsert, AfterInsert. This will give the user more flexability.

Have a look at this link, maybe that is what you are looking for, a Generic List based object that acts as a List but with built-in events such as BeforeItemAdded, ItemAdded, BeforeItemRemoved, ItemRemoved and ItemsCleared.

Hope this helps, Tom. :)

Actually, you will be surprised how easily you can create a collection like that. Take a look at System.Collections.ObjectModel.Collection<T>. That is a class which is intended to be used for such things. It has a few virtual methods (one for every operation) which you can override and control very well.

I would recommend Option 1, since it is more clear and straightforward.

Here is an example which you can use for such purposes:

using System;
using System.Collections.ObjectModel;
using System.Collections.Generic;
using System.Linq;

namespace TestGround
{
    public class MyCollection<T> : Collection<T>
    {
        public class ListChangeEventArgs : EventArgs
        {
            public IEnumerable<T> ItemsInvolved { get; set;}

            public int? Index { get; set;}
        }

        public delegate void ListEventHandler(object sender, ListChangeEventArgs e);

        public event ListEventHandler Inserting;

        public event ListEventHandler Setting;

        public event ListEventHandler Clearing;

        public event ListEventHandler Removing;

        public MyCollection() : base() { }

        public MyCollection(IList<T> innerList) : base(innerList) { }

        protected override void ClearItems()
        {
            Clearing(this, new ListChangeEventArgs()
            {
                 Index = null,
                 ItemsInvolved = this.ToArray(),
            });
            base.ClearItems();
        }

        protected override void InsertItem(int index, T item)
        {
            Inserting(this, new ListChangeEventArgs()
            {
                Index = index,
                ItemsInvolved = new T[] { item },
            });
            base.InsertItem(index, item);
        }

        protected override void RemoveItem(int index)
        {
            Removing(this, new ListChangeEventArgs()
            {
                Index = index,
                ItemsInvolved = new T[] { this[index] },
            });
            base.RemoveItem(index);
        }

        protected override void SetItem(int index, T item)
        {
            Setting(this, new ListChangeEventArgs()
            {
                Index = index,
                ItemsInvolved = new T[] { item },
            });
            base.SetItem(index, item);
        }
    }
}

You could also modify the ListChangeEventArgs to have a bool property with the name "Cancel", and control wheter to do the change or not in the collection.

The after events could also be useful, if you need such functionality.

Of course, you won t have to use all events of every collections, or if it is really necessary, there may be other ways to solve the problem depending on why do you need this functionality.

EDIT:

If you really only want to validate the items and set their Parent property to an entity instance, you can actually write a collection which does exactly that, or something that generalizes the problem in another way. You could pass it a delegate which validates the item, and and another which tells it what to do when an item is added or removed.

For example, you can achieve this using the Action delegate.

You could consume it this way:

class Order : Entity
{
    public Order()
    {
        OrderItems = new MyCollection2<OrderItem>(
            //Validation action
            item => item.Name != null && item.Name.Length < 20,
            //Add action
            item => item.Parent = this,
            //Remove action
            item => item.Parent = null
        );
    }

    ...
}

The major benefit of this approach is that you don t have to bother with event handlers or delegates, beacuse all that you need can be written using lambda expressions, however if you need something more advanced, you can always use a real delegate instead of them.

This is an example of the collection:

public class MyCollection2<T> : Collection<T>
{
    public Func<T, bool> Validate { get; protected set; }

    public Action<T> AddAction { get; protected set; }

    public Action<T> RemoveAction { get; protected set; }

    public MyCollection2(Func<T, bool> validate, Action<T> add, Action<T> remove)
        : base()
    {
        Validate = Validate;
        AddAction = add;
        RemoveAction = remove;
    }

    protected override void ClearItems()
    {
        foreach (var item in this)
        {
            RemoveAction(item);
        }
        base.ClearItems();
    }

    protected override void InsertItem(int index, T item)
    {
        if (Validate(item))
        {
            AddAction(item);
            base.InsertItem(index, item);
        }
    }

    protected override void RemoveItem(int index)
    {
        RemoveAction(this[index]);
        base.RemoveItem(index);
    }

    protected override void SetItem(int index, T item)
    {
        if (Validate(item))
        {
            RemoveAction(this[index]);
            AddAction(item);
            base.SetItem(index, item);
        }
    }
}

For such purposes, I think this is the cleanest way to go.