[step:Prove (2) $\Rightarrow$ (1): in $\mathcal{O}_L$, UFD forces every prime ideal to be principal]This is the substantive step. Assume $\mathcal{O}_L$ is a UFD; we show every nonzero prime ideal $\mathfrak{p} \unlhd \mathcal{O}_L$ is principal. Combined with [Ideal Group Is Free Abelian](/theorems/1590) (which expresses every fractional ideal as a product of integer powers of primes) and the subgroup property of $P_L$ (closed under products and inverses), this will show every nonzero fractional ideal is principal, hence (3), hence (1).
Fix a nonzero prime ideal $\mathfrak{p} \unlhd \mathcal{O}_L$. Pick any nonzero $x \in \mathfrak{p}$ (possible since $\mathfrak{p} \neq (0)$).
[claim:A nonzero element of $\mathcal{O}_L$ has a finite factorization into irreducibles]
Every nonzero $x \in \mathcal{O}_L$ has a factorization $x = u \cdot \pi_1 \cdots \pi_k$ with $u \in \mathcal{O}_L^\times$ a unit and $\pi_1, \ldots, \pi_k \in \mathcal{O}_L$ irreducible (including the empty product case $k = 0$ where $x = u$ is a unit).
[/claim]
[proof]
By hypothesis $\mathcal{O}_L$ is a UFD, which is defined as: every nonzero non-unit has a factorization into irreducibles, unique up to reordering and unit factors. If $x$ is a unit, take $k = 0$, $u = x$. If $x$ is a nonzero non-unit, UFD gives the factorization directly. Irreducibles multiplied by a unit remain irreducible, so writing $x = \pi_1 \cdots \pi_k$ and setting $u = 1$ produces the desired form.
(A more hands-on proof independent of the UFD assumption: since $|N(x)|$ is a positive integer, we can argue by strong induction on $|N(x)|$, using multiplicativity of the norm and [Units via Norm](/theorems/1578) to bound the irreducible factors. But we will use the UFD hypothesis here since we assume it.)
[/proof]
By the claim, the fixed $x \in \mathfrak{p}$, $x \neq 0$, factors as $x = u \pi_1 \cdots \pi_k$. Since $\mathfrak{p}$ is prime and $x \in \mathfrak{p}$, by iterated application of the defining property of prime ideals (if $yz \in \mathfrak{p}$ then $y \in \mathfrak{p}$ or $z \in \mathfrak{p}$), some factor $u, \pi_1, \ldots, \pi_k$ lies in $\mathfrak{p}$. The unit $u$ cannot lie in $\mathfrak{p}$ (otherwise $\mathfrak{p}$ would contain a unit, hence equal $\mathcal{O}_L$, contradicting $\mathfrak{p}$ being a proper prime ideal). So some $\pi_i \in \mathfrak{p}$.
Relabel so $\pi_i = \pi$. The principal ideal $\langle \pi \rangle \subseteq \mathfrak{p}$.
[claim:In a UFD, an irreducible generates a prime ideal]
Let $R$ be a UFD and $\pi \in R$ irreducible. Then $\langle \pi \rangle$ is a prime ideal.
[/claim]
[proof]
First, $\langle \pi \rangle$ is proper: $\pi$ is not a unit (by definition of irreducible), so $1 \notin \langle \pi \rangle$, and $\langle \pi \rangle \neq R$.
Suppose $ab \in \langle \pi \rangle$, i.e., $\pi \mid ab$, for some $a, b \in R$. We must show $a \in \langle \pi \rangle$ or $b \in \langle \pi \rangle$.
Without loss of generality $a, b$ are nonzero: if $a = 0$, then $a = 0 \cdot \pi \in \langle \pi \rangle$ and the implication holds; similarly if $b = 0$. So assume $a, b \neq 0$. By the UFD hypothesis, $a = u_a \alpha_1 \cdots \alpha_m$, $b = u_b \beta_1 \cdots \beta_n$ with $u_a, u_b$ units and $\alpha_i, \beta_j$ irreducible. Then
\begin{align*}
ab = (u_a u_b) \alpha_1 \cdots \alpha_m \beta_1 \cdots \beta_n.
\end{align*}
The hypothesis $\pi \mid ab$ means $ab = \pi \cdot c$ for some $c \in R$. If $c = 0$, then $ab = 0$ forces $a = 0$ or $b = 0$ (integral domain), handled above. Otherwise $c$ factors as $c = u_c \gamma_1 \cdots \gamma_l$, so
\begin{align*}
(u_a u_b) \alpha_1 \cdots \alpha_m \beta_1 \cdots \beta_n = u_c \pi \gamma_1 \cdots \gamma_l.
\end{align*}
By uniqueness of factorization in a UFD (up to reordering and units), $\pi$ must be associate to some $\alpha_i$ or $\beta_j$. If $\pi \sim \alpha_i$, then $\pi \mid \alpha_i \mid a$, so $a \in \langle \pi \rangle$. If $\pi \sim \beta_j$, then $b \in \langle \pi \rangle$. Either way, the required disjunction holds.
Hence $\langle \pi \rangle$ is prime.
[/proof]
Applying this claim with our $\pi \in \mathfrak{p}$: the ideal $\langle \pi \rangle$ is a nonzero prime ideal, and $\langle \pi \rangle \subseteq \mathfrak{p}$. By [Ring of Integers is a Dedekind Domain](/theorems/1582), every nonzero prime ideal in $\mathcal{O}_L$ is maximal. So $\langle \pi \rangle$ is a maximal ideal. From $\langle \pi \rangle \subseteq \mathfrak{p}$ and $\langle \pi \rangle$ maximal among proper ideals, together with $\mathfrak{p}$ proper, we get $\langle \pi \rangle = \mathfrak{p}$.
Hence $\mathfrak{p}$ is principal.[/step]