The following was posted on YC/BC thread by a very reliable source
The "length of stay" mugs are really 14 day mugs. Let's say you check in today at the BC and purchase the length of stay mug. It's good at any Disney resort (and now they are saying only resorts, not water parks) for 14 days. So you can do split stays, you can go on a 3 day cruise and come back and for 14 days, your mug works. If your reservation is for 17 days, you bring the mug back to merchandise on the 14th day and they will reprogram it for the next 3 days. They can "read" the chip that is on the mugs so they can tell the day you purchased it, etc. As far as loosing one, you MUST show your receipt.
You cannot microwave these mugs. It fries the chip. If you bring it back to merchandise with a fried chip, then you are out of luck, receipt or not.
There is also a regular old cardboard cup that can be purchased for a few dollars. It is good for 2 hours and/or 4 refills. It also has a chip on it.
The dispensers only dispense 12 ounces at a time and once you use your mug for a fill-up, you cannot get another fill-up for 2-1/2 minutes.