I'm glad you asked. The Parallel Worlds concept wins easily, mainly because it's been done many times on a variety of shows, from Star Trek to The X-Files. This season, Fringe has an ongoing storyline about a parallel Earth.If you hate it, then I am reassured that it must be good.
After all, what would your average television viewer be able to accept easier? A magic spell of forgetfulness, or the explanation of parallel worlds?
The device of a "spell of forgetfulness" raises too many questions. Would Doctor Fate erase the personal memories of every man, woman and child on Earth? Would he erase every newspaper article, every photograph and computer record that had information about the JSA? This is an extreme solution to the problem of the existence of the JSA in the Smallville 'verse.