Question: What is your desired degree course at oxbridge and what a-levels are you considering?
If you are thinking of going into something heavily mathematical like engineering, computer science, physics, econ/finance etc., you shouldn't disregard taking 4 a-levels as if you plan to take further maths (which you probably should in any of those cases) then 4 a-levels is usually quite common.
An EPQ takes about a week or two of work to finish, not too difficult. Don't stress too much about it.
Don't get caught in the trap of thinking you can self-study everything if you have bad/mediocre teachers. It's a massive waste of the time you could spend on improving your personal statement and preparing for entrance exams/interviews. Also don't boil down the utility of a teacher in sixth form to just whether or not they teach you all the A-level content you need to know - going to a school with a history of high-achieving students means teachers there will be aware of the standard to which a student needs to be to get into oxbridge and will be better versed in how to assist you. Plus, they will likely know of and be able to assist you with more supercurricular activities which is very important for a UCAS application.
ALSO if the school has a history of sending students to oxbridge then they will have more oxbrige-specific support available to students which may not be available elsewhere (e.g. some sessions on interviews, there may be a specific teacher who can give support for a certain admission test, etc.)
A 'competitive environment' is not something you should avoid. As apparently someone said, “If you’re the smartest person in the room, you’re in the wrong room.”
Also ignore any talk about A-levels relative to the sixth form. To my knowledge Oxbridge only looks at GCSEs contextually, not A-levels (but that may be worth verifying).
I take 4+epq at a top grammar school and in my experience it's not that difficult (although again this depends on the subjects you are taking). Is it sometimes stressful? Yes. But it's part of the game. Nobody ever got into oxbridge without some amount of stress about it, so there's no point avoiding it like the plague.
To summarise, I think you should go for the more competitive one (although I am biased so interpret this advice as you will)