Do I set it as an output then set it's low state?
YUP.

Think of it like this. LED connected anode to positive rail. To make it light with the cathode connected to a PIC pin you would output LOW. (LED has a drop down resistor)

The same pin will also have a 100K resistor to the positive rail in the transistor case to keep it from floating low.

I can not see why the transistor idea would not work, have not tried it though.