Can the MK1 /IK1 transducer be connected to three wires using the Power GND as negative reference for the output)?
Yes. The transducer can be connected to three wires. But in this way you have a zero offset due to the voltage drop on the resistance of the Power GND cable, which depends on cable length, on any contact resistances, and on temperature. You also have increased noise in output to the transducer because current powering the sensor flows to the Power GND.