Keep in mind that there is a GLOBAL navigation that sits above the top of this page. The screenshot you see is the top left of the page. Below it is where the page's content sits.
The question is— which option provides better usability?
I think the first option is less redundant and shows the hierarchy of information much better. The second option is more redundant—even confusing—and makes the hierarchy of content less clear. In fact, it even might suggest that Projects and Project Names are sub-sections and not breadcrumbs.
To me, option one is the clear winner, but a fellow visual designer does not think so.