Yes, they can build on paths.
Plot Resetting is fairly easy to do, but it can be boring.
1.Start up the game on the day when you know a villager is going to move in. Make a new human player. WARNING: DO NOT START WITH ONE OF YOUR EXISTING CHARACTERS.
2. Once you have made a new character, walk around town until you see the villager's reserved plot.
3. If you like where they are, talk to Isabelle and build your house.
4. If you don't, then turn off your system without saving. Then repeat the above steps.
The reason you can't start with an existing character is because it automatically saves your town as soon as you start the game. If you start with a new character, however, then your town won't save until you build your house.
I'm sorry if this a jumbled mess of instructions, but hopefully you understand them somewhat. I'm sure someone can explain it much better.

Oh, and I forgot to mention that once you build your house and save, you can always delete it afterwards. So no worries!