There would be no reason to dillute that much. It is not like you are doing this to drink the finished product, you simply want it HIGH strength, thus the extra water to 'reduce' the flavor does not play in at all.
Dropping it to 35-40% is probably in line. Then reflux on the fast side, just to get the ABV up to 92-94% is probably right. 94% works great in an alcohol stove.
As for contamination of your still, that should be a non issue (or almost non issue), if you are simply rerunning fores. Most of the things that will dirty up a still, are the solids from a wash/mash, and also some of the tails. Fores (and heads), are volatile, and will run right through, and not stick in the packing.
Hillbilly Rebel: Unless you are one of the people on this site who are legalling distilling, keep a low profile, don't tell, don't sell.