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And yes, moderators can convert to community wiki, but I don't think that it necessary just because an answer is outdated.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 anymore.
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 the answer.
