Cutting the top growth and starting it as a new plant is your best option.
Then you will have a normal looking cactus plant.
Best place to cut it is where the base is smallest. By cutting here the time for it to callus will be quicker and you can get it in a new pot sooner.
If you want more plants from the old base then you should cut an inch or more off the top of the base plant. This will expose new nodes that will push out new growth. If you leave the base alone with the old cut edge it may never sprout new growth.
I would separate the two plants sharing one pot. It is obvious the root systems are not equal. In separate pots they can be watered at different intervals according to their demands. If left together the weaker plant will just keep going downhill.
