RE: Upgrading
1. Being oxygenated will not kill denitrifying bacteria.
2. Bacteria will reproduce quickly to compensate. This can happen within days. You will just go through a very brief cycling period.
3. Your problem is going to be from stiring up the nutrients trapped in your sand. Expect and plan for a algae bloom after moving to the new tank.
4. Lights depend on what you are planning on stocking your new tank with. SPS and clams - MH, anything else, fluorescents (VHO, PC or HO T-5s). MH may have a higher initial cost, but are cheaper when you consider the bulb replacement costs on a per watt basis.
Gary
125 SPS, 75 gal. LPS/softie reef, 9 gal. Nano