I was under the impression that this was only available for non rakeback players, so why do I have the option of converting points for cash? I would rather have rakeback, so I haven't tampered with it and figured I would ask here first.

If you have rakeback you will be ineligible for the VIP points exchange. As soon as you attempt to use that method it will show an error message stating your ineligibility.

i think you can still use the points for tourney entry (??) which is similar to cash.

Wonder if the VIP points for tournaments change based on your VIP rank?

No. All players receive 10 VIP points per $1 while rakeback players receive 6.5 per $1.