I have no idea why electrolytic is shown in the diagram, the part is not critical and any non-polarized capacitor should work.
Pin 1 is really for internal compensation and not intended to be grounded at all but I don't think any damage will occur if a latching switch is used. I think I would try adding a resistor (100 Ohms?) in series with the switch, if it still works it would be safer. Only in series with the switch, leave the capacitor between pins 1 and 8 or it might oscillate.
Brian.