From linear algegra, for an hermitian matrix H, if we can find a unitary matrix U so that U^{\dagger} H U = diag{h_1, h_2, ..., h_n}, then basically the eigenstate corresponds to h_i is the i'th column of U.
Naïvely I expect the same thing happens for the reduced density matrix. Here after we "gauge" the MPS to, say, site i, then we automatically have something like \rho = U^{\dagger} D U, where D is diagonal and "right orthogonality" is used. So I guess all we need to do then is to extract the "column vector" from the U. Is that the correct way of doing this? Thanks!