The MDH is set 2 nm prior to the decent point and stays there until such time as you become visual and are assured of a landing. This will have to be above the MDH set in the MCP window. If nothing is seen, then wait for ALT AQUIRE/HOLD, set the MAA and initiate the Go-around.
If you set the MAA 300' below the decent point, which is possible with the system as it operates now, there is nothing to stop you flying the aircraft into the ground without any visual refernce established. The aircraft will not level off once the MDH is changed to an altitude above the present altitude.
There should be no either-or option, 1 or 2.
The only safe way to use the system is as described; leave the MDH until you see the runway, then reset the MAA, recycle the Flight Directors, and land.