Hello John, interesting dilemma you have. I think you have a good idea as well. I would be interested to learn about the level of competition for this term, I imagine it can not be that intensive if your PDF is ranking #1.
My recommendation would be to build the landing page, but include some of the content from your PDF as a preview. You can then offer the free download sign up to continue reading. It's likely the PDF is ranking well because of the content.
Of course you will want to create a 301 redirect to the new landing page from the old PDF URL. Also, keep the same title tag or anchor text that people are using to link to the PDF or the title that Google is currently giving the PDF. I think you have a good chance of retaining the #1 ranking if done right.
You may also have meta information within your PDF that you will want to migrate to the landing page. We're a big fan of landing pages at AdFicient and this sounds like a promising opportunity. Best of luck.