You should be able to do this without a problem. As long as the dates fall within the dates on the code you should be fine. As always, this gets scary if you get a CM who doesn't really know what they're doing as this could cause a BIG problem losing the code. If a problem does happen it can be fixed, but it gets frustrating with the hoops you have to jump through to remedy such an unfortunate situation. Make sure you confirm everything with them if you go this route.
You will not have to cancel your reservation. They will simply change your reservation from CR to whatever other resort you choose and then they will have to submit a request for the refund. I did this 2 weeks ago and got my money back in a few days.
Regarding the 40% off, I'm sure that this will work for other Mods/Deluxes, but not sure about Value's. When I did bounceback, I had a choice of 20% off Values, 30% off mods/deluxes and 40% off DVC. If your PIN will allow 40% off a Value, then you should be good to go. The money you save regardless from downgrading will still be a good chunk of change coming back to you from CR.