There isn't currently a way to toggle an existing point between corner and non-corner. The way to do it right now is what you did - just delete the corner point and insert a new non-corner point or points.

Some day I'll try to figure out a way to have a toggle - this might become possible when there is kind of an "object properties" display that shows the properties for the currently selected object. In this case that panel would be a good place to show whether the selected point was corner or non-corner and let you change it there. But this panel won't exist until sometime in V2.

If you still have that curve that would not fillet as you expected, please post it here, maybe that was a bug in fillet.

- Michael