I am sure I have booked the occaisional hotel on paid-flex rates that has a similar 1nights cancel fee on their standard flex t+c terms, so suspect for this hotel this not a temporary peak-season flex T+C's adjustment.

Points bookings are flexible so this hotels amended flex t+c's are inserted into your recent points reservation. I would not expect these modified flex t+c's to apply to your points booking though.

However always safest to email the hotel, as if you do not cancel a points night, points are refunded and you get charged money. The same applies here if room is uncancelable, if you can't use and can't cancel, either canceling or not using would result in points returned and money charged.