The "Upgrade" is one of the perks of the VIP program, which means you would've needed to buy a large number of points at Retail. (If you recently bought points at Retail, the Bonus points they give you will sometimes give you a temporary VIP level status).
The Discount is available after a certain time, for unbooked units. This means that if you currently have a reservation, you must make a new one which would qualify for the discount. If you are quick about it, you can often cancel your existing reservation to free up the room and your points, and then immediately rebook under the discount if you don't have enough points to have 2 bookings at one time. Keep in mind however that this transaction would use another Reservation transaction point. [all reservation transactions done in a single day online will utilize a single point...via the phone reps, 2 points]. if you don't have any extra reservation transactions available with your current membership, you may be charged a fee.
As for the "renting" of points, I haven't really done it, but it can get quite expensive quite quickly. You'll also probably need to call in your reservation during the regular reservation period (10mo-3mo) to do it. Another option that might be more cost effective and give you more flexibility would be to pool your points. Depending upon your use year, you might be able to pool the following use year points ($39 one-time charge), which will give you immediate access to those point and allow you to use them during a 3yr period instead of just the 1 year. This would be one way to leverage your points for a longer stay or in a bigger/nicer unit.