can 250mb reward be removed in order to add the 500mb at level 2?

Yes you can do, however, you need to wait at least the activation for the 250 reward and after that you can swap the reward

here the guide

https://fizz.ca/en/faq/what-do-i-receive-my-rewards-program

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  To apply an upgrade on your plan:

  Since an upgrade boosts your monthly plan, your plan must include that service in the first place for that upgrade to work. Say for example you receive  mobile data upgrade: your plan has to include mobile data for you to enjoy an upgrade consisting of mobile data.

  Your plan showcases more than one available slot? Take advantage of the situation and assign an upgrade to each of those slots. Say for example you have an upgrade of 250 MB of mobile data, and another of 500 MB. Once these two upgrades have been activated on your plan, you’ll get to enjoy 750 MB (250+500) of extra mobile data each month.

  1. Log into your account, and go to Overview.
  2. In the left column, click on the summary that shows your My Rewards level. You can also scroll down below your usage summary to My Rewards and click on See details.
  3. Open the tab in the lower right-hand corner.
  4. Select the upgrade and click on Apply.
  5. At that moment, you’ll see the white boxes below your plan start to move. Those are the slots where your upgrade can be applied.

      

     • The slots with a + sign are ready to welcome your upgrade.
     • If you select a slot where there’s already another upgrade, we’ll ask you to confirm the swap. If you accept, the new upgrade will be applied to your plan come your next payment cycle.
     • Some slots are locked and cannot welcome an upgrade yet. You’ll unlock these slots when you reach higher My Rewards levels

      

      
     
     
  6. Select the slot by clicking on it.
  7. Your upgrade will be activated on your plan at the start of your next payment cycle.
  
  

You don't have to remove it. If you try to activate the 500mb upgrade, it will give you the option to replace one of your used slots. It won't be active until your beginning of your next cycle.