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Ponytail palms come from hot, arid climates, so they will only truly thrive outdoors in areas that have similar conditions (USDA Zone 9 and warmer). They can survive brief cold snaps that dip into the 30s, but they don't tolerate freezes well and likely won't be happy if kept below 40°F for long. They are also prone to rotting from too much water, so if your winters are wet or snowy, the plant could easily get too wet and rot. Additionally, depending on where you are located, it may be too late in the season to plant it outdoors, as the shock of going from indoor temps to cold outdoor temps could damage it.
Young ponytail palms can be cut back to encourage branching, but I wouldn't recommend trying that on one as large and as old as yours.
Though these plants aren't particularly rare, a large specimen would likely be of interest to a botanical garden or university!
Boy, that's a big one alright!
It sounds like your analysis could be correct: the plant is likely getting too much water and its roots may be rotting. Unfortunately, with a plant so huge, there's not a whole lot that you can do, aside from hoping for drier weather.
To confirm your theory, take a look around the base of the plant, poking gently with your foot to see if you can find any obvious soft spots. These would be a sign of rot and too much water in the soil. If you can't see anything aboveground, gently dig down (no deeper than 1ft) around the base of the plant in a few different spots to see if you can find any rot belowground. If you can't find any signs of rot there either, the problem is probably deep within the roots of the plant.
There's not much you can do for the plant at this point, unfortunately, but ponytail palms are fairly hardy. If it gets a chance to dry out, the plant should recover!
Wow! That's quite an old tree! Congrats on keeping it happy for so long.
Lower leaves turning brown is not usually a cause for concern—especially if the plant is continually putting out new leaves—as that's just part of the natural growth cycle of the plant: grow new leaves, drop old ones. But, if this is the first time you're seeing it happen after having the plant for so long, there may be outside factors in play.
Have you changed your source of water in the past year or so? Desert plants can be especially sensitive to chemicals in tap water (such as fluoride), which can cause the tips of leaves to turn yellow and brown. Try watering with distilled or spring water for the next few months and see if that solves the issue.
Browning tips may also be caused by too much intense sunlight. But again, if the plant is still regularly putting out new growth, it seems like it's happy where it is.
The pot size is likely not an issue, as ponytail palms don't mind being constricted. Moving it to a larger pot will only encourage it to get even bigger (and more unmanageable)! The amount of water is also not likely a problem, as long as you are letting the soil dry out properly between waterings.
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Ponytail palms are non-toxic, so your cat will be fine if he ends up chewing on a few leaves. However, it would be best if he didn't!