Don't demagnetize the cartridge. Many recommend against it. There is a thread here on Audiogon that goes through this in more detail. I sat in on a lecture by Wally Malewicz (Wally Tools) at RAMF and he recommended no demagnetization at all, not even passive.
If you want to go low output MC I also recommend the K&K step-up having just bought one for my medium output Benz M2. Kevin Carter is very helpful and will recommend the proper step-up ratio and gain based on your set-up. He'll also build it for you for a modest fee (this is a kit).
If you want to go low output MC I also recommend the K&K step-up having just bought one for my medium output Benz M2. Kevin Carter is very helpful and will recommend the proper step-up ratio and gain based on your set-up. He'll also build it for you for a modest fee (this is a kit).