You will probably have to reinstall DB2 using ESE install type (but can use the same DB2 code). That assumes that you selected WSE when DB2 was first installed. Make sure you install the ESE version to a different path than the existing one.
However, if you installed ESE originally, and just created a WSE instance using the ESE install, you do not have to reinstall DB2.
After figuring out the above DB2 code install issues you can backup the database, uncatalog the existing database, drop the old instance, create a new ESE instance (install the ESE license), and re-catalog the database to to the new instance (using a path).
Instead of re-cataloging the database on the new instance, you could use the backup of the old db to restore it in the new instance.
After re-cataloging the existing db (or restoring the backup), you should run the database update utility and rebind the packages, as you would if you installed a new fixpack (see fixpack install instructions).