We just did this type of "point reallocation" last month...
If the existing reservation was made at 7-months (or later)--i.e., not made between 11 and 7 months, they can reallocate points w/out canceling the existing reservation.
If, however, it is a reservation made w/home resort priority (between 11 and 7 months), then they do have to cancel & rebook...
In our case, it got even more complicated since there were also transferred, borrowed and banked points involved...but the CM worked it out and was incredibly pleasant about doing so. I was dealing with 4 separate reservations, one of which was made w/home resort priority (and included T-giving, so it couldn't be touched)...she wound up reallocating so I used my transferred-in points and my borrowed points, leaving me some current year points to bank to use for next year's T-giving reservation...
Not sure I could have done it on my own...it was complicated! But the CM made it very clear that none of the reservations (made at 7 months or later) were being canceled and rebooked to do the reallocation--and we decided early-on not to touch the T-giving reservation (made at 11 months) to avoid having to cancel & rebook...
Good luck w/your "project!"