As far as I know, Courthouses only reduce unhappiness from occupied cities... That is, the city is still technically occupied, but you aren't getting unhappiness from it like you would without a Courthouse.
"Unhappiness from number of citizens in non-occupied cities reduced by 10%."
Since the city is still occupied, I would be willing to wager that it would have no effect on the occupied city.
Capture a different city and select raze: FP won't work on it.
As Austria, Marry a city state & annex immediately: FP actually works in this case because marrying a city state doesn't subject it to occupied status.
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