Raising magic is already pretty darn pejorative, I generally would argue down any houserule or rules reading that increases the cost of more magic points, especially for adepts. In the rules, I seem to remember that losing essence specifically causes you to lose magic points entirely, not just the use of them. Therefore, I'd logic out that you aren't really at 5 anymore at all, because you've LOST that 5th point, bringing you to 4. In your example, down to 3.
Anyways, while another point of powers does unlock some interesting powers for the adept, it comes at quite an exorbitant price, especially considering the limited metamagics of use to the adept. In this example, to get back up to 4, you need to spend 20 karma (a fair chunk) for that 4th point. However, to attain the next point, you need to spend 38 karma! That's a quite big chunk of karma, to pick up a general benefit of what.. 4 dice to something, as a general rule (a lot of the non-utility increasing abilities seem to cost ~.25-.5 and provide +1 dice in applicable situations)?
And that's generally the only benefit more magic points provide, few of the (non mystic) adept powers use the magic pool for anything. This is unlike technomancers/resonance and mages/magic entirely, as both of those receive some (quite potent) benefits that scale directly to their attribute, like... threading or spellcasting itself.
I get that raising attributes is intended to be somewhat difficult (though it can be done quite easily with some relatively cheap ware), as it improves a potentially wide range of abilities, but making the adept's core progression (along their core mechanic, power points) follow an attribute that otherwise does them little (Mystic Adept) to no good at such a high cost is one of the few things that really feels off-kilter to me in the Shadowrun system. What that does is ensure that they get it softcapped or capped at chargen and never improve it over gameplay (or do so once), due to the high cost.
According to the book, you'll get at least 2 karma per adventure (Which run more than a single session of gameplay, most likely), probably closer to 4-5 if you're a good player or are clever. Many people play any given character but once a week, which means that's a month of good solid progress for any single magic point increase if you're lucky, assuming (big one here) that you complete an entire adventure every week, and that you get 5 karma each and every week. If you aren't a good RP'er or player, and you're making close to the probable minimum (survival, and either you completed most objectives or you failed to do that because it was extra challenging) of 2-3. Now you're looking at months. Just seems.. not worth bothering with.
Anyways, rant about power points being based only on magic and how it encourages powerful starting specialist characters that don't grow aside, I'd go with the lower costing option. You've actually lost those points, and act entirely as if that IS your score. The other number is just there so that someone looking at your loss of essence can explain why you still have a positive magic score, but not a massive notoriety score without resorting to "You're cheating".
