IIRC, the Hollywood Boulevard site is home to most of the Cumulus sticks, so it might be tricky getting the OK from the competition, assuming Cumulus owns the tower itself. Then again, is Tibbs' old station--The Great 98 (WHWY)--at that site? Could they diplex it with 98.1? They'd still need space for the xmtr.
Spacing is another matter, with 102.7/WXBM being the culprit. Even by dropping to a Class A, it would still need about 60 miles clearance from Robertsdale--and FWB is right at 60 miles. But I don't believe that a Class A can be anywhere close to competitive in Okaloosa County. Not only is it just too big, georgraphically, but the population is way too spread out: the beach towns... mid-county (Niceville-Valpo)... and the Northern Tier (Crestview). Can't cover them all with an "A"--so why spend several hundred thousand dollars to end up with the same as what you've already got? Could maybe move it to Wave's tower as a C3 (only need around 65 miles clearance from XBM), but again you lose in contour what you'd gain in proximity.
Net/net? Why bother? Maybe they can slap a booster (on-channel translators) on 103.1 in FWB to kick up the signal there. Multipath is often a problem, but it might be worth a little fuzziness over Choctaw Bay to boom into the clubs--especially if they do go the EDM/House route with the music.
The move from DFS to Freeport was smart. At least South Walton has humans, and businesses. Ultimately they may just have to figure out how to address the pretty cool smaller market that they actually cover.