In response to ohmark's questions:
Upgrade rewards cannot be combined with standard travel package rewards (or any hotel reward) to cover the cost of nights requiring Anytime Rewards. A separate Anytime Reward would need to be ordered.
Increasing the category of travel package rewards is a creative customer service tool used by Marriott Rewards associates to help accommodate our members' travel arrangements, but the official policy is that travel package rewards, once ordered, cannot be altered. For this reason, points would not be returned if, for example, a category six reward was used in a category five hotel.
To answer BigLar's question:
There is no fixed number of times that a travel package hotel reward could be extended. As long as the reward exists in the same form, with the same point cost and benefits, we are happy to extend it. I suspect that some Marriott Rewards associates quote "one year" just to be on the safe side, but again, this is not a rule.
I hope that helps to clarify for everyone. As usual, if anyone has additional questions I would be happy to answer them for you.