Hi. I don't know that there's anything wrong with putting potting material around and under a rootball as you describe if you're 100% sure that there's no rotting mass of degrading bark/moss at the center. I might be inclined to soak the rootball for a good long while before repotting to see if I can then wiggle and pick the root system apart. I've done this before (even cutting some of the roots that formed a collar around the inside of the rim of the pot) only to find a black, soil like mushy material at the center. It's a great way to rot the root system from the inside out.
I can't imagine that the beallara would be well anchored if you just wind up potting under and around the root mass. If it's not well anchored, every time you jostle the pot around when you water it you're going to be doing small amounts of damage to the roots that, over time, might aggregate to some meaningful damage. I might give repotting another go after soaking the rootball for a good long while. Alternatively, a well placed rhizome clip might help anchor the beallara into the pot.
Potting up could be the root - err - cause of the problem too. I'm told that Beallaras, like other onc types, like to be tightly packed and constrained. A larger pot means slower drying medium and that could set off root rot (or accelerate root rot that's already going on as discussed above) and cause the leaves to turn yellow as you describe.
I know there is a method of removing back bulbs and cultivating them into new plants with new leaves - but I've never done it myself, so I'll let someone else chime in on that one.
If you post pics - particularly of the root system, it would help us understand exactly what's going on.
Good luck!
- J
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