I have been told this can be done with a normal .300 blackout sizing die, is this true?
Is there anything I should watch out for?
I have done a little reloading of .223s & have a little extra military brass with crimped primers leftover
Thinking about reloading the .300blk with 150gr or less to make a supersonic rounds, what is the best powder for this.

Yes.

Cut to approximately 38-40 mm, run it through the sizing die then trim.  Might want to anneal the new neck.

Check the loading books suggested powders.

Yes the 300 Blackout sizing die will form and size in one operation. There are some .223 brass that has too thick case walls and the necks of 300 Blackout cases will be too large with a seated bullet. Look at this topic and it has a general list of good and bad brass to use to form 300 Blk.  Necks with seated bullets should be .334" or less. Lake City is the best brass I've used to convert.
http://www.300blktalk.com/forum/viewtopic.php?f=141&t=88599

Just to clarify for OP - you want to anneal before you form the case in the die (as shown in Dryflash's step-by-step image).



edit to delete pic url so it doesn't work. dryflash3

I wont repeat what Dryflash posted, because his method is likely the best.

My method is slightly different.  I do not anneal because I simply am not set up for it.  Has not seemed to effect my cases as Im at 3-4 firings on a few of the cases with no issues.

I only use LC cases.  I use Hornady sizing die.  I use a Harbor Freight saw with a Squirrel Daddy jig.  I use a home built SSTL media tumbler.  I use a WFT2 to cut to length.  I use home brew case lube.

My process from the start with once fired LC brass:

Decap with Lee Universal
Cut crimp with RCBS crimp cutter
Cut cases to length with saw and jig
Put cases in SSTL tumbler to remove dirt and burrs from cases - I run about 2 hours
Lube cases and size with Hornady die
Trim all cases to length with WFT
Tumble cases in SSTL media to deburr and remove case lube - I run about 2 hours

I run about 250 at a time.  Beyond that, I start to get annoyed with the saw.  

There are a lot of ways to cut the .223 cases down.  I think some are substantially superior to others.

I use a Harbor Freight 2" chop saw with a Zepp cutting jig.  Others use home crafted jigs with various other kinds of saws.  I start out with wet tumbled, very clean brass, chop the cases essentially at the shoulder, debur, anneal, form in the sizing die, then trim with a Giraud trimmer.

When using a chop-type saw, be aware that the shoulder/neck of the case will fly off at an unpredictable angle with substantial speed.  WEAR EYE PROTECTION ALL THE TIME, and gloves may not be a bad idea depending on your saw.  I'm still playing with the design for a "chip guard" cover for my saw to keep from finding bits of cases all over the room.

Yes, to some extent it does.  Start out with known-good brass like LC and you'll be fine.  

Some of the headstamps listed as "bad" in the linked thread at 300 Blk Talk are iffy in my opinion, having read the whole thread.  In some cases the member reporting "bad" brass doesn't seem to have done much more than said it was bad, with no evidence or explanation provided.  Once you get your feet wet with good brass, you can decide for yourself whether or not others are worth your time.

Good brass and annealing will make for much better 300 Blackout cases than rushing through the process with whatever you have on hand.

S&B is one of the "bad" headstamps on 300 Blk Talk, and one that I was less than convinced about because of how it was reported.  I'm glad to hear positives about them, since I have a bunch of 'em and was worried about getting them mixed in for "plinking" rounds.  Not worried now.