Well, a gram + of test and stacked at 20%? Whatever sides you will normally get would become amplified. I would skip that option.

Go with your 1st option and cut like there is no tomorrow. You need to weigh the good and the bad. The good being muscle, and the bad being fat. Well, your fat loss would FAR outweigh your muscle loss. So the fat loss wins here, making it priority over losing less muscle. MUCH MUCH less.

Who cares if you lose 5lbs of muscle? At least you will be ready to cycle again and you can hit it hard. Lean bulking takes a lot longer than most people think. It's what I'm starting Oct. 1st, but im running through a 6 month cycle to achieve reasonable goals.

In closing, I say lose the body fat, then cycle. Every one of my previous cycles that SUCKED was a result of attempting to rush my results.

Maybe others can chime in with more opinions/options Either way, I think you have incredible potential and wish you the best of luck.