We learned our lesson the VERY, VERY, VERY Hard Way!
NEVER accept an upgrade when offered on a points stay.
We were offered an upgrade at VWL this summer from a studio to a 1BR.
We had wanted to switch to a 1BR since a couple days after booking our Studio.... but it wasn't available, at anytime after our initial booking.
So we were prepared for a week in a Studio.
When we went to check in at WL, we were told that they had no more studios left in inventory. Would we be OK with a 1BR? OF COURSE WE WOULD!
(Why there was never a 1BR in inventory for us to book on our own I will never know!)
But we were thrilled, we thought we received some Pixie dust, and it make our stay so much easier since I had just changed jobs and had to attend web meeting and phone conferences in the afternoons almost every day.
Well, when we got home and checked our accounts we discovered that they had checked us in to the studio, charged us a week's worth of points for the studio, AND charges us for a week's worth of points for a 1BR!
BEYOND
They had taken EVERY SINGLE point from one of our contracts for the following year without our approval.
NEVER ACCEPT AN UPGRADE unless you make the check in agent PRINT your room reservation, initial the point usage, and provide you with a copy!
We got everything fixed, but it took a dozen or more calls back and fourth and hours spent on the phone.
Book what you want, and if you don't have the points, or can't afford to pay cash for what you want.... do a little thing most folks refer to as "Dealing with it!" (Not in reference to OP! Just a general rule to live by!)
You do not want the front desk agent digging in to your points, under and circumstance! They have NO IDEA what they are doing with points!
Having received, and know people who have received upgrades at regular Disney hotels - THAT is entirely possible.
We once paid for standard view at Wilderness Lodge (Lodge, not Villas) and were upgraded to Club Level.
I know a couple who was upgraded from Garden View at Boardwalk to a 2 BR (NOT VILLA - a deluxe...presidential suite!)
And someone else who was upgraded from Water View at Beach Club to Club Level.
So they upgrade people ALL of the time - but don't count on it staying at a DVC resort!