Is it better to take honors or AP classes?

Honors courses can only help you. You want to take the most challenging classes offered and as such, taking AP classes when you can fits that criteria. Honors has this reputation as well, but AP is seen as better because it mimics being in an actual college classroom and it can give you actual credits. I'd say just have a good mix but aim for more APs your senior year instead of shooting for honors the whole way through. If you know you aren't very strong in an area (such as math), I'd recommend just taking honors there.

Basically, AP is better than honors but don't discredit honors.

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If you would like to get into these highly selective schools I would first not advise taking any academic/basic classes. Honors classes still carry weight and you will not be "taken out of consideration" for these colleges if you take a few of them. They still carry some challenges, but AP classes prove to these colleges that you will be able to handle the rigor of their classes. In addition, they carry a larger weight so I would suggest taking AP Chemistry only if you know/believe you will get an A in the class. These colleges will like to see a high unweighted GPA as well as a high weighted one, so take as many AP classes that will benefit you. Also, the high school you attend will play a role in the admissions process so don't fear and aim to be in the top 5-10% of your class.

The short answer here is that if you're aiming for schools in that group, your schedule should a) include as many Honors and AP classes in general as possible, and as few non-Honors/AP classes as possible. When it's between Honors and AP, AP >>> Honors, so I would not recommend dropping AP Chem for those two honors courses. Try to take as rigorous a schedule as you can moving forward, especially in your senior year (your grades won't have as much of an effect because colleges will only see the first half of your year, but your schedule rigor absolutely will).