Oh dear! It's always frustrating when the succulents we've been caring for get neglected.
When succulents stretch out like this, they are searching for more light, and will never get back to the same plant they were before they stretched.
You are definitely on the right track for what to do next! First though, I would make sure the succulent has firm, plump leaves from receiving enough water.
It looks like in addition to lack of sunlight this guy may also be under watered. Make sure before you do any pruning the succulent leaves are firm.
Then, behead your plant using a pair of sharp, sterile scissors (these are my favorite!). Let the cutting dry out for three to five days, and replant it in well-draining soil.
You can also remove some (but not all) of the lower leaves and propagate them. Lay them on top of well-draining soil, water them whenever the top of the soil is dry (this might be daily).
I would keep the original plant stem in the same planter, and continue to water and care for it. New rosettes should begin to form, and your plant should survive just fine.
Be sure that all the pieces of this succulent (new cuttings and leaves and the original) are getting plenty of sunlight. If you aren't able to keep them in a window that is getting lots of sun, I suggest getting a grow light to help.