Best method for downsizing breast implants? What happens to the scar tissue/capsule thats formed around the 1st implant?

Dear jmhig218,it is hard to tell for sure without an examination. If you are considering a surgery, I would suggest you to consult a board-certified plastic surgeon. Only after a thorough examination you will get more information and recommendations.Daniel Barrett, MD
Certified, American Board of Plastic Surgery
Member, American Society of Plastic Surgery
Member, American Society of Aesthetic Plastic Surgery

Thank you the question but online consultants will not be of much specific help to you.  Keep in mind as you are thinking about your goals that sometimes adjustment of the breast implant pockets (capsule adjustments) and/or breast lifting may be necessary to achieve the outcome you are looking for.   Whether or not the adjustment of the breast implant capsules and/or breast lifting will be necessary will mainly be dependent on your physical examination; specifically, factors such as the amount of redundant skin, quality of skin elasticity,  and how much you downsize will be important.  
In other words, there may be other variables involved, besides just breast implant volume, that come into play when it comes to achieving the desired aesthetic outcome.
Generally speaking, the best online advice I can give to ladies who are considering revisionary (downsizing) breast augmentation surgery is:
1. Concentrate on choosing your plastic surgeon carefully. Concentrate on appropriate training, certification, and the ability of the plastic surgeon to achieve the results you are looking for. Ask to see lots of examples of his/her work.
2. Have a full discussion and communication regarding your desired goals with your plastic surgeon. This communication will be critical in determining breast implant size/type/profile will most likely help achieve your goals. 
In my practice, the use of photographs of “goal” pictures (and breasts that are too big or too small) is very helpful. I have found that the use of words such as “natural” or "down a cup size” or "C or D cup" or "significant change" etc means different things to different people and therefore prove unhelpful.
Also, as you know, cup size varies depending on who makes the bra; therefore, discussing desired cup size may also be inaccurate. 
3. Once you feel you have communicated your goals clearly, allow your chosen plastic surgeon to work with you in determining the best plan to achieve your goals.
I hope this helps. Best wishes.