This certainly works on my edge 800 and 810, I do this all the time.
Yes, it will create a new locations.fit ( containing 3 Garmin offlce locations! )
However, I seem to remember that on Mrs. F's Edge Explore 820, deleting this file did not delete the waypoints, and I did have to do it all manually one-by-one like you say.
It seemed to have imported them into some internal store which is not exposed in the exported filesystem.
I'd say go ahead and delete the file and re-start the device and see what happens.
If you are of nervous disposition, make a backup copy of it onto your PC first, so you can restore it if required.