[*]DVC retains ownership of a very small percentage (less than 10%) of points at any resort. This is so they can swap villas out of service if there's a maintenance issue. If this isn't needed, the villas are made available for cash reservations. They're not our villas. DVC owns them.
The maintenance percentage is stated as being "no less than 2 percent" of the points available at any given resort. And DVC keeps it pretty close to the 2%. My 2009 budget offers the following figures for BWV as of 12/31/07:
Total Points Available: 4,888,849
Maintenance holdings: 97,836
(That's 2.0012% for maintenance.)
I doubt that it is within DVC's power to rent rooms for cash from its maintenance allocation. These holdings are not just for extensive refurbishments--they are intended to be used for ad hoc renovations like shampooing or replacing carpets, painting, drywall repairs, plumbing fixes, tile work, etc. These tasks cannot be predicted months in advance.
One other source for cash rooms that wasn't listed in your post is unsold / reclaimed points. In 2009 DVC will be holding unsold (new) inventory at SSR (Treehouses) BLT and AKV. And they also re-acquire points via things like ROFR or loan defaults. Those points are tracked separately and it's certainly within Disney's rights to turn them into cash rooms for CRO.
As far as the process of trading out, others have described it accurately. Here's a quick illustration:
* Member calls DVC and uses 500 points for a cruise.
DCL commits the cabin and other resources to the member but has absolutely no use for 500 DVC points.
* DVC takes the points and makes some balance sheet transfer to DCL. Let's say the cash rate for the cruise is $4000.
* So DVC is now out $4000 but they have 500 extra points. The only way for DVC to recover that money is by renting rooms through CRO. Using the same
point charts available to members, DVC blocks out 500 points worth of rooms and sends them to CRO. Many of those rooms will undoubtedly go unbooked and some will rent lower than rack rates due to AP or other discount codes. But the goal is to recoup at least $4000 from the cash reservations.
DVC is the one who decides which rooms to pull from inventory for CRO. Some will certainly come during periods when the resorts are at max occupancy. But we cannot expect DVC to only pull rooms during slower periods. If they did that, the percentage of rooms rented to cash guests would drop and DVC would have to charge even more points for cruises and other non-DVC stays.