We booked a cruise using Developer's points from our add-on last year, and also had to cancel due to baby's recurrent pneumonia. We lost our $95.00, plus maybe 80 points? When we got the all clear for baby's health to rebook, we had to spend another $95.00 x 2 as we could only use our Developer's points at non-
DVC resorts, so we booked Poly and Yacht Club concierge. We were also within the last few weeks of our use year (only time this has happened as I was on maternity leave).
We had no problems with this as these are the rules - it's not Disney's fault that our baby was ill, and we chose to cancel.
Good luck, Tiger
Good luck