HI there

You can lay your concerns to rest, Tampa, muscle loss is not an issue with LCing, assuming you're eating sufficient calories (From fat) and adquate protein to maintain a positive nitrogen balance. LCing is muscle sparing, actually. There's a lot of misinformation floating around about this way of eating, you're best off doing a little researching (we have an excellent research forum and a few very active exercise forums FYI).

Re gaining muscle and losing fat simultaneiously. It can be done if you're new to lifting heavy weights. Newbies get that bonus. Those who're active lifters and start LC don't. Eating to gain mass and eating to lose fat are two very different things, and if you're trying to do both at the same time you're going to end up very frustrated.

I would concentrate on the fat loss, then work on the muscle gains. That being said - lifting weights while LCing will go a long way to helping you a) keep your current lean mass and b) burn body fat.

Just be prepared that you wont be quite as strong as you used to be. LCing causes muscle glycogen to be depleted - leaving you a little weaker. This does not mean you can't lift however!

HTH
Nat