It looks like you could remove the bottom third (cutting where the stem is narrowest) if you think maybe the first cut was too close and the rot has gotten in there. But in all fairness this is going to be an ugly scene no matter what, as the cut surface scars and heals. The rooting powder has to be relatively fresh (not expired) for the active ingredient to work. But even the powder alone (so-called inactive ingredients) probably helps dry things out up front, and worked in your favor that way. Discoloration without softness would be less concerning to me than the other kind.
This is going to take some time, and while the cactus recovers from the cut you need to keep the cut surface dry. Especially in the beginning months after you pot it up. The fastest way to make this end badly is to water early and often. Consider a mix of at least half pumice or even all pumice (substitute sharp gritty rock equivalent if you prefer). Keep this project out of the rain come fall-winter to avoid issues early on.
This is not something I have done, but I would guess it is going to require patience and restraint on your part.
