Will changing a /system partition file system delete all data?
It highly depends on how you change the partition FS and what software you use to do it.

If I guess it right, the FS on your /system partition is Linux ext4, which does not have a lossless way to be converted to FAT that I am aware of, so I guess it's mostly formatting it twice: to FAT, then back.

It's obvious that formatting will make all data on that partition lost. However, if you find, or if the tutorial instructs, another way to losslessly convert ext4 to FAT, it's possible that you can change the FS without losing any data. But be aware that changing ext4 to FAT will mess up all the permissions on files, which may potentially lead to extra work before it turns into a usable state.

Proceed with caution.