All reservations are considered complete the day of arrival. If you have a reservation that spans two Use Years, all points (regardless of Use Year) are charged on the first day of the reservation- whether you checked in or not. You cannot cancel a reservation on arrival day and have the points put in a holding account- they are already considered used by
DVC. If you cancel that reservation within 30 days of arrival- the 2004 Use Year points would still have to be used, from the holding account, by February 28, 2005 and the other points would have to be used by February 28, 2006 (also from the Holding Account).
In this case, while you may want to call MS tomorrow and see if they would allow it based on the comments you're questioning, points MUST be current for any date they will be used for a reservation. As I already mentioned, March 2004 points will be accepted for a reservation for any date thru February, 2005- but will not be accepted for any dates past February 28. If you use 2005 Use Year points to continue that same reservation, they would be considered "used" for that reservation on February 27, 2005 when you check into the resort.
DVC has been known to make exceptions to these policies on a case-by-case basis. This usually happens with weather related events (blizzards, hurricanes) but MS has also been generous with some personal circumstances in the past (as they should be, IMHO). However, these exceptions are normally made for events regarding arrival at the resort- not at the time of making the reservation.
If MS allows you to use 2004 Use Year points to be used after their expiration date when you call tomorrow, consider yourself very fortunate and please post the results of the conversation here.
Good luck!