In your example, you would just pay 8 BP and create a new rank 2 feat. You'd still technically have the rank 1 feat, which you could still use at a lower power cost than the rank 2 version.
Of course, you can house rule it and use the method you've outlined (refund rank 1 for 4 BP, then spend 8 BP to create a rank 2 version).
A future revision of the rules will clarify this and possibly include rules for "powering up" existing feats.