You could remove/insert the items to the according place in the ObservableCollection bound to the CoverFlow and that should work as expected. Please find attached a sample project, which I created quickly to show you what I mean. On a click of a button I am inserting the selected item in the next index (+1) of its current one. In the demo is not illustrated how to remove the one on the old place, but the approach is the same. You should also set the SelectedItem of the CoverFlow after that.
Hope this helps.
the Telerik team