I have a cash reservation at FW, I made it because it took forever for DVC to post the points and I didn't want to miss our dates. I've been a DVC member for awhile before we got our RV and now we us the RV more then the villas so I'm hoping this can be done on a regular basis.
The points inventory is separate from the cash inventory, so you can't just "convert" an existing cash reservation to use points. If there are rooms available in the points inventory, you can book that and then cancel your cash reservation.
DVC Mike is basically correct, even for cash regular WDW locations, including FW through CRO, DVC has to book a new reservation, CRO can not simply convert an existing reservation to a DVC reservation.
And remember, the ability to use DVC points at regular WDW locations can be discontinued at anytime.