Step 1: Understanding the locus.
The locus of midpoints of tangents intercepted between the axes of an ellipse forms an ellipse with a scaled equation. This scaled ellipse has a factor of 2 in the equation.
Step 2: Conclusion.
The correct equation for the locus is \( \frac{x^2}{a^2} + \frac{y^2}{b^2} = 2 \), corresponding to option (1).