there should be no affect or deletion/problems with the FWSM during your IOS conversion.
haven't seen any issues in my LAB. the conversion process has a part where the CatOS commands/config are converted to the IOS commands/config required.
you should make sure you backup the FWSM configuration and partitions before you begin.
please see the following link for the CatOS to IOS conversion tasks for the sup720:
http://www.cisco.com/en/US/products/hw/switches/ps708/products_tech_note09186a008015bfa6.shtml#conv_720