I can imagine (please underline the word, imagine) why DELETE+INSERT may work faster than UPDATE on a table with 1000 columns.
First of all Oracle cannot read all the 1000 columns row in a single I/O. Oracle reads ( i would say reconstruct the row )first 255 columns (the barrier set in old release), then next 255 columns, then next 255 columns and finalyy the last 235 columns in the 4th read even if all data resides in a single oracle block.

I think UPDATE may involve again reconstructing the row in 4 pieces, that may hurt performance.

I have not tested my thoery. If time permits, I will do it.

Tamil