Here's what I like to do - take off every piece of equipment. Buy ten of Doc Galaktik's cheapest healing item. Allow yourself to be beaten up by the sorceress. Use cheap healing item for 3 hp or whatever it gives. Repeat until your cheap items run out. You'll be MUCH more likely to succeed - about 80% of the items and skills you try to use will get through, as opposed to, as far as I recall on the first time around, 13%.
Furry suit is an excellent idea. Be sure you don't rely on any effects - she dispells them all at the beginning of the fight. Don't use disco face stab at all during the fight - she'll dispell the effect right away. If you have a wussiness potion on hand, use one for the first form, no more, and one for the second form, no more. (Otherwise, she'll just shake off the de-levelage, and you'll have wasted two items.)
For my disco bandit incarnations, I found it easiest to kill her by using combat items. If you're gonna level up, that's a good thing. Buy ambidextrous funkslinging from your guild. It allows you to use two combat items at once. Buy up a bunch of Doc Galaktik's most expensive healing item. (20 or so usually works.) Get an assorted array of star throwing stars (expensive), photoprotoneuron torpedoes (less expensive), frigid ninja stars, maybe. Stuff that does damage, and decent amounts thereof. Shy away from plot holes, since they delevel her, so unless your wussiness potion failed, she'll just shake off the effects.
General strategy during the actual battle: Just chuck items at her. If your HP gets down to below half of the maximum, chuck combat items with one hand and drink homeopathic elixirs with the other. If you get desperate, double-elixir action!
A final note - familiars. What do you plan on using. Dodecapedes aren't available anymore (except for millions of meat), so you could either invsest in a ghost pickle on a stick (dunno how the market has fluctuated with those - I bought mine for 30 million meat, but that was WAY before the recipe was reimplemented, or even before the Spectral Pickle factory made its one-day pre-ascension appearance), or, if that's too expensive, look at a magimechtech micromechamech. (Massive damage.) Otherwise, plain ol' mosquito would be a good enough bet.