Welcome James! Glad to see you around here. I am sure you will get a lot more scientific and professional answers to your questions than I can give, but I will tell you that I had the same two goals when I started my journey to fitness, but I focused on losing the excess fat first (even though I incorporated weight training into my workouts). I found by doing that, when the weight came off, I already had some pretty good muscle mass to work with. It almost was like killing two birds with one stone if you know what I mean.
I like Dean's cycle idea, not only for the reasons he states, but also because it would keep people like me from getting bored. Short term goals always work best for me.
Anyway, good luck!