1) You can go into the reservation on your IHG account and change the rate at any time with no penalty - for example from a restricted rate to a flex rate.

2) When you put your credit card details in the system for a reservation - no preauthorisation is generated. Hence the card needs to be live at the time of charge in order to charge it. Recurring charges (which is not this) can be marked by the merchant as such and mastercard/visa/amex have a "card updater" service which actually provides them your new card number. A helpful tip I suggest is to use a Revolut virtual card with each new booking - these can be terminated at any time and are properly unable to be charged no matter what the merchant may do. Someone is undoubtedly going to mention your IHG rewards account etc. I've never had this affect my rewards account even with last minute cancellations. Hotels generally just cop it and move on. If you are concerned just do a generic booking with no rewards number in the future.

If the hotel charges you - send a copy of that email - do a chargeback and move on.