You can edit answers even if they're not community wiki. It just reduces the reputation requirements to be able to edit without approval if a post is CW. The main use of CW is to directly invite others to edit the post.
And yes, moderators can convert to community wiki, but I don't think that it necessary just because an answer is outdated.
From a more general question on Meta.SO I answered a while ago:
From the blog post on Community Wiki from Grace Note:
The intent of community wiki in answers is to help share the burden of
solving a question. An incomplete “seed” answer is a stepping stone to
a complete solution with help from others; an incomplete question is a
hindrance and an obstacle to getting a solution as no one understands
the inquiry. It is in answers that the goal of community wiki, for the
community, by the community, shows its truest colors.
If you know that your answer is incomplete and you want to encourage
other users to add information to it, you can make it CW to invite
others to edit the answer. Since everyone can propose edits, community
wiki is not necessary anymore for collaborative answers, so it has
lost a lot of its usefulness. It is now more of an invitation for
other users to edit, but it is not really a technical necessity
It is rather used as a sign for others that you don't mind, and even
encourage other users to edit the post. Many users hesitate to make
big changes to posts belonging to other users, CW means you relinquish
the sole ownership of the answer and encourage other users to add to