Cut the spike. Think of it this way: Flowers are one way for a plant to propagate. If you take away it's one direction to spread, it's going to have to find another way. Plants WANT to live, so they'll do anything they can to do it. And besides, when you have it healthy again, you'll have lots of blossoms lots of times.
I had a similar problem to yours with an Onc. Gower Ramsey I rescued from a flower shop (seriously, I don't know why they are even trying D: ). Most of the plant was fine, but one little pb broke off - had a leaf, but had no roots to speak of (all of them were rotted D: ). So I did an experiment. I put it in a smaller pot and did the same thing I would've done to the big one: thin layer of sphagnum on the bottom, medium grade bark and charcoal in the middle, thin layer of sphagnum on the top. Every now and then I'd take the sphagum off and poke around to see if it was doing anything interesting, but while it was shrinking, it still had its leaf, so I figured, "Well, I don't know, it's doing something." and left it alone. That was in August. Fast-forward eight weeks: Tiiiiiiiny tiny pb has started growing from its side, just as fast as the big one is shrinking. It's now about the size of my pinky fingernail.
So no, personally, I don't think you should keep it dry - it's dehydrating as it is anyway. Keep it moist. Let it get the feeling that this is a nice place to live, it doesn't want to abandon ship just yet. And best of luck, whatever you decide to do.