It's not entirely unprecedented. The first major refurbs at many resorts only had cosmetic updates to bathrooms. OKW, BWV, I think Beach Club and Boulder Ridge as well. Most they got was a new coat of paint and new light fixtures.
The reserves funds can only be spent on refurbishment. So if they aren't spending any money on the bathrooms, it's still in the account for future use. IMO, the most likely scenario is that the impact of inflation over the last several years has left the reserves with insufficient funds to cover a more extensive project. I don't have first hand knowledge of construction costs in Socal, but the aftermath of the Palisades and Eaton fires certainly didn't help. Literally tens-of-thousands of structures that need to be rebuilt, all battling for the same skilled laborers.
If there isn't enough money to update the bathrooms, the choices are:
1) Issue a special assessment to bring in additional dollars. That's asking owners to pay even more, owners who have themselves been hit by inflation, or
2) Delay
Projects like this are literally paid for by owners. There's no reason for Disney to delay if the funds are available and the work is needed.
I get the frustration, but I doubt there's anything illegal about how they acted. There aren't any explicit written guarantees regarding refurbishment frequency or scope. As long as Disney isn't siphoning the money off for something else, the project planning is entirely in their hands.
All they have to do is say something like: "We completed a thorough evaluation of those facilities and felt that the current condition warranted not immediately drawing additional reserve funds or issuing a special assessment to fund a complete makeover." That would pretty much be the end of it. Albeit with a little more closure than we have now.