I find it hard to believe membership would be revoked. So, what would DVC do? Keep all your money and cancel your membership? Good luck.
Yep. When you breach the contract, they can terminate for breach. No illegal activity in a room rented with your points is spelled out as a term of your contract.
They aren't LIKELY to unless its fairly egregious, but they have the legal right to. My guess is that underage drinking that other guests notice and complain about combined with vandalism to the room might be egregious enough (so would drug use in your room). Just don't breach your contract and you'll be fine.
You, as a member, WANT this. Imagine another DVC member who gets caught breaking into DVC hotel rooms when guests are in the park and robbing their rooms. Do you want that jerk to keep his membership? Cause he won't be in jail for the entire term of his contract.