Is this canceling only when both are award tickets? If no, can this be used to avoid a cancellation fee?

Book flight 1 with cash, later find out you can't fly.
Book an identical flight 2 with miles.
Hope DL cancels flight 1, and you refund flight 2 72 hours before.

It seems there's no risk. If Delta does nothing, you cancel flight 2 and eat the fee you would've eaten anyway. If Delta cancels flight 2, you're in the same position as not having done this. If Delta cancels flight 1 (or both 1 and 2), they should refund the entire amount and you win.