At a bodyweight of 170-175, you fall into the light heavyweight division, whose limit is 178 pounds.You could walk around at a heavier weight and still fight in your division, but I wouldn't exceed the light-heavy ceiling of 178 by more than 2 or 3 pounds.Otherwise, when it comes time to compete, you may have a hard time losing the excess weight.
As long as you have a solid nutrition plan, I wouldn't worry about losing any muscle weight.Just don't overdo things in the weight room.And you would be surprised at how lean and muscular interval training can get you.But the fact is, if you want to compete, then you have to have the skills and the conditioning.The amount of muscle mass you carry will have little to do with your performance.