Step 1: Concept The intersection of two diameters is the center of the circle.
Step 2: Meaning Solve the joint equation $x^2 - y^2 - 2x + 4y - 3 = 0$ to find individual lines or find the point of intersection using partial derivatives.
Step 3: Analysis $\frac{\partial f}{\partial x} = 2x - 2 = 0 \implies x = 1$.
$\frac{\partial f}{\partial y} = -2y + 4 = 0 \implies y = 2$.
Center is $(1, 2)$.
Radius squared $r^2$ is the distance from $(1, 2)$ to $(1, 1)$: $r^2 = (1-1)^2 + (1-2)^2 = 1$.
Step 4: Conclusion Equation is $(x - 1)^2 + (y - 2)^2 = 1$.
Final Answer: (C)