I read the rule to mean that you can purchase the amount you are short for the desired redemption, but not more than 500,000. You must redeem the entire existing balance before you can purchase any points. After the purchase and redemption your account must have a near zero balance, less than 1000 points.
Here's A Link to the Terms & Conditions:
http://www.membershiprewards.com/cat...PURCHASEPOINTS
Here is the entire "Purchase Points" section of the T & C's:
1. You may purchase points in 1,000-point increments for $25 per 1,000 points, which will be billed on your Card account.
2. You may only purchase a maximum of 500,000 points per calendar year.
3. You may purchase points only for your own program account. Points may not be purchased except in connection with a conversion of points to a participating Frequent Customer program or redemption of points for a reward.
4. Corporate CMs, other than Business CMs, with only the Corporate Card enrolled in the program, may not purchase points.
5. Points purchased are subject to all other program Terms & Conditions applicable to points generally, including those concerning point forfeiture.
I don't see anything about redeeming your entire existing balance before you can purchase points.