I await to see if this actually happens. Taking your entire pension out and paying tax of 20/40% on it (after the free 25% part) doesn't seem to make sense to me. You can already take out 25% tax free and that would provide a decent enough deposit for a BTL for most. If it doesn't would you...
Go for it.
Use a reputable letting agent. 10% is about right for 'lettings' only, that means you deal with any maintenance issues yourself. You could let them manage the whole thing for you but that'll be nearer 15% + their choice of tradesmen. In years to come you may decide to do away with...