How do I properly remove an svn:externals and replace it with a local (non-external) copy of the same directory?

In the root of your working copy:

svn propedit svn:externals .

You should see a file in your editor of choice that has lines like this:

path/to/extenal http://url/of/repo

If you remove that line, then run a commit/update, it should remove the external definition from that path, and unlock the path.

You may need to run a svn cleanup if it complains.