Yes, repurpose definitely should be accepted as a word. It's in several contemporary dictionaries, and examples of its usage are easy to find.
It's come onto the scene fairly recently. The Corpus of Contemporary American English has no instances before 2000, and shows a big surge in usage since 2010. The Google Ngram Viewer, which only covers texts up to 2000, shows the word coming into use in the 1990s.
Anona, the word does seem to be used less frequently in Britain than in the US, and that is true also of the hyphenated form re-purpose.
I'll add repurpose and repurposed as rare words. As you say, RM, the latter won't actually appear in any puzzles, but who knows, perhaps we'll one day have 11- or 12-letter puzzles.