When an award reservation is made, the T&Cs state that if the reservation is not cancelled before the cancellation deadline, the CC you provided during the reservation will be charged a fee which I do believe is the rate and taxes for one night's stay.

I have never had an award reservation that I didn't cancel before the deadline, so I haven't dealt with this personally. You should be able to get your points back, but you may not be as lucky getting your payment back. The T&Cs are pretty clear that the CC would be charged. So basically, you are at the mercy of the hotel management and their willingness to "break" the rules for you. You might call and throw yourself on their mercy, but don't expect too much on this.