If you think it covers all under the sun, gather all the documentation you have / code / etc that is older than the priority date of the patent application, don’t make an argument and send it to the examiner on this link:
You will help him.
Under 35 U.S.C. 122(e), such submissions may be made before (1) the later of (i) 6 months after the date of publication or (ii) the date of a first Office action on the merits rejecting any claims, or (2) before the date of a notice of allowance, if earlier. Section 122(e) also provides for such fees as the Director may prescribe. This new provision was effective on September 16, 2012, and applies to any patent application.
But suppose that they get grated that wide patent,
The American Inventors Protection Act of 1999 (AIPA) provides damages for infringement in the period before a patent applicant is granted a patent. Provisional rights, also known as pre-issuance royalties, provide a patentee with the prospect of obtaining a reasonable royalty from a third party that infringes a published application claim. This right is provided only if the third party has actual notice of the application and a patent issues from the application with a substantially identical claim (source)
I could say that you have notice of the application, so you should take care of this provisional right, also file the third party preissuance submission and also file your own patent.
put my work online for free (open source)?
There are big differences between publishing something for free, online (public domain) and using an open source license, if you license something is because you have certain rights over the licensed thing, the source code by it self does not infringe the patent but if you license it under some license like GPL v3 you are granting others some rights that you don't have
GPL v3 says:
Each contributor grants you a non-exclusive, worldwide, royalty-free patent license under the contributor's essential patent claims, to make, use, sell, offer for sale, import and otherwise run, modify and propagate the contents of its contributor version.
You can't grant those rights (if they finally become effective with a granted patent)
apply for a patent my own work and being more narrow? (narrow the scope of the technologies used and scope of the invention)
Yes, you can try that, but do it before publishing your code online (for free, in wharever kind of licence you wanna use). If you publish your code online it will be taken as prior art by most patent offices. In the US you will have a grace period of 12 months to file the patent after the publishing of your code.