The early Abrahamic and general Canaanite religions are super interesting, I absolutely recommend reading on them. Now, considering I'm neither a historian nor a linguistics expert, take anything I say with a grain of salt.
From my understanding and memory on the subject, "El" was used as the noun "god", as the name of the Canaanite chief god, who would later be usurped by YHWH, and as a title of sorts, meant to indicate gods and important people supposedly affiliated with the pantheon chieftain. I believe the latter is related to the older Assyrian culture, it certainly follows the same pattern. The first and second cases weren't widely concurrent, however - there is a clear trace telling us the original pantheon leader lost influence over time before being relegated to "just another god" and finally getting absorbed into the figure of YHWH, a bit like how Odinn slowly faded into the background of Nordic religion as Thor became the figure you'd pray to.

In short: both of your scenarios are right, but at different points in history (except they weren't monotheistic at first).