QUOTE (Muspellsheimr @ Oct 10 2008, 12:14 AM)
1) Raising from 1 to 2. This should be obvious, as that is exactly how raising it after Magic (Essence) Loss works.
2) No, for the same reasons your Magic would not increase in the same circumstances if you had actually lost the Magic.
Once you Awaken with Latent Awakening, you are treated exactly like any other Awakened character. No exceptions, no questions. The only thing different from Latent Awakening & Magician (or other) is that with Latent Awakening, you do not need to pay for Essence Lost obtained before your Awakening.
Actually your making an assumption here that not everyone does. There was a huge debate (more then one I'm sure, but only one I spesifically remember) about the relation between essence and magic loss.
To sum it up there where two main ideas. One was what you are saying, if you lose a point (or part thereof) of essence, your magic goes down by one and the fact that it was higher is completely forgotten. The other idea was that your magic acts very much like an enhanced attribute, and you would have magic 5(4) and thus would have to pay the cost to raise from 5->6 to get your effective magic to raise to 5.
The largest arugment for the second method was so that people didn't twink out by getting a magic of 2, buying an essence of wares, raising to 2 again for only 6 karma, and repeating. It also helps to further limit awakened who take 'ware because they have a lower effective max.